By SETH SUTEL
AP Business Writer
NEW YORK (AP) – Steve Case, a co-founder of America Online and one of the main architects of the disastrous AOL-Time Warner deal, said Monday he has resigned from Time Warner Inc.’s board of directors.
Case had relinquished the role of chairman two years ago, but remained on the media conglomerate’s board of directors despite the opposition of shareholders angered by the fallout of AOL’s purchase of Time Warner, which led to massive write-downs, shareholder lawsuits, regulatory scrutiny and a management purge.
Other key executives involved in the deal have already left the company, including former Time Warner CEO Gerald Levin and Bob Pittman, a former AOL executive.
Time Warner has agreed to pay a combined $510 million to settle shareholder lawsuits and regulatory charges that AOL fraudulently inflated its online advertising revenues and subscriber counts. The company also took multibillion dollar write-downs and removed AOL from the beginning of its name.
Case said in a statement that he was leaving to focus on growing his new investment company and to avoid any potential conflicts of interest. He also said he was pleased to see a “renewed focus” on AOL at Time Warner. Case, through a spokeswoman, declined to make any further comment.
In April, Case launched an investment company called Revolution LLC which now owns several businesses including Wisdom Media Group, a company that makes TV programs on yoga, acupuncture and shiatsu massage; a high-end spa outside Tucson, Ariz., called Miraval and Exclusive Resorts, a company that markets luxury vacation rentals.
Ironically, after several years of being seen as an albatross around Time Warner’s neck because of its steadily declining dial-up subscriber base, in recent months AOL has become a coveted acquisition target among major Internet companies such as Yahoo Inc. and Google Inc. as it taps into the boom in online advertising.
Time Warner has been under pressure from activist shareholder Carl Icahn and a group of allied investors to take drastic measures to boost its share price, which is still about 75 percent below the levels reached before the AOL-Time Warner deal was announced in early 2000.
Time Warner has disagreed with Icahn’s proposals, which include completely spinning off its cable TV subsidiary and stepping up a share repurchase program. Icahn also has criticized the fact that several directors who approved the AOL-Time Warner deal remain on Time Warner’s board. Many investors, however, seem to agree with Time Warner CEO Dick Parsons’ focus on turning around AOL.
Case noted that he would still be one of the largest individual shareholders in the company following his departure, and said he would remain “actively engaged” as future strategies for AOL are considered.
According to SEC filings, Case owns about 0.3 percent of the company’s shares, about half the size of the stake owned by CNN founder and Time Warner board member Ted Turner.
In a statement, Parsons thanked Case for his years of service to the company. “We’ll look forward to his wise counsel as the company continues to move forward. He will be missed,” Parsons said.
Time Warner spokesman Ed Adler said the company had no immediate plans to name a successor for Case to its board, which now has 14 members. He declined to make any further comment on Case’s departure.
Time Warner’s large array of media holdings includes the No. 2 cable TV company in the country, the Warner Bros. movie studio, HBO, CNN and other cable channels and Time Inc., a major magazine company that publishes Time, People, Sports Illustrated, InStyle, Fortune and many other titles.
Time Warner shares rose 8 cents to close at $17.83 Monday on the New York Stock Exchange. Shares of other major media companies were also higher.