NEW YORK–Outgoing AOL Time Warner Inc. Chairman Steve Case acknowledged Monday that the 2001 merger he helped orchestrate has not lived up to expectations, but he remains confident that the marriage of Time Warner and America Online will prove sound over the long run.
“There’s no question that this merger so far has been a disappointment,” he said in an appearance on CNBC. But “if you look out 10 to 15 years, I think people will look back and have a different view on this merger.”
Case announced Sunday that he would resign his post at the media conglomerate in May, saying he had become a distraction and had concluded AOL Time Warner was better off without him as chairman.
“Some shareholders continue to focus their disappointment with the company’s post-merger performance on me, personally,” said Case, who will remain on the board of directors.
The resignation of the last remaining architect of the AOL Time Warner merger could open the door to a spinoff of the embattled Internet division or a name change diminishing AOL’s prominence in the company.
Neither is in the works at the moment, but both ideas have been subjects of discussions within the company. Now that Case has decided to resign, such ideas hold more sway, a source familiar with the matter said.
Most analysts and investors said they do not expect any shifts in basic company strategy as a result of Case’s announcement. They said it was more a symbolic closure than anything else, because Case has not been very active in day-to-day operations.
“To the majority of the people they had to worry about–the Time Warner constituency and shareholders–Case was just a reminder of the big mistake they made, and they didn’t want him to lead the company,” said Gartner analyst David Smith. “I think most of the change has already happened.”
Case’s departure may have been hastened by recent reports of more financial problems at the company.
AOL Time Warner, which took a $54 billion charge last year to account for a decline in America Online’s value, is expected to report another multibillion-dollar writedown this month–possibly in excess of $10 billion, according to some analysts–for the same reason
Next to Case, the top-ranking executive from the America Online side of the business is Paul Cappuccio, the company’s general counsel. The majority of the new management team, including Chief Executive Dick Parsons, comes from the Time Warner side.
AOL Time Warner stock closed Monday at $15.03–68 percent below the $47 AOL traded at in 2001 when the merger was approved, and roughly 80 percent below the $72 price tag AOL carried in 2000 when the merger was announced.
