Fergie's Tech Blog

The Two Faces of Steve Case

A Fortune.com article by David Stires, via CNN/Money, reports that:

Steve Case, AOL's co-founder and a chief architect of its 2001 merger with Time Warner, is now calling for a breakup of the media giant. But as recently as October, he defended the merger to FORTUNE. On a sunny October morning, Case, who was sitting on a tan leather couch in his Washington, D.C. office, insisted the deal still made sense.

Case certainly did very well by the deal: From 1999 through 2002 he sold stock valued at $475 million. But the merger has turned out to be a disaster for the company. AOL Time Warner, valued at about $290 billion after the merger announcement in January 2000, shed more than $150 billion of that market value by January 2002. The company wrote off almost $100 billion in goodwill, settled Securities and Exchange Commission and Department of Justice investigations for $360 million, and set aside $3 billion to resolve shareholder lawsuits.

Now, Case says it's time to "undo" the merger by splitting Time Warner into several independent companies and allowing AOL to set off on its own path. In fact, Case reveals in an op-ed piece in Sunday's Washington Post that he had proposed to the board back in July that it was time to split Time Warner into four freestanding companies -- Time Warner Cable, Time Warner Entertainment, Time Inc., and AOL -- each with its own strategy, stock, balance sheet, management team and board.

posted by Fergie @ 12/12/2005 04:42:00 PM