Monday

Case quits AOL,
avoiding a fight

Besieged chairman: Let's move business ahead

By Jeff Bercovici

   Sorry, fight fans: The most anticipated media brawl of the year has been called off.
   In an abrupt about-face, AOL Time Warner chairman Steve Case has decided to resign this spring, acquiescing to the growing chorus of voices that have been calling for his ouster since early last fall.
   Case will step down at the annual shareholders meeting in May, although he will remain on the company's board and serve as co-chairman of its strategy committee.
   No replacement has been named, but most speculation has CEO Richard Parsons taking on the role of chairman as well. Another possibility that has been mentioned is that of vice chairman Ted Turner succeeding Case, but that is seen as less likely.
   Although AOL Time Warner board members have been publicly agitating for Case to resign since last September, he had always indicated that he intended to fight for his job.
   Just what brought about the change of heart is not entirely clear. Case said it grew out of the company's need to put its past troubles behind it.
   "This company does not need distractions at this time, and given that some shareholders continue to focus their disappointment with the company's post-merger performance on me personally, I have concluded that we should take steps now to avoid the possibility of that effort hindering our ability to pull together as a team and focus fully on our businesses," he said in a statement.
   It's worth noting that his announcement came days after the three-year anniversary of the deal that brought America Online and Time Warner together in a merger then valued at $165 billion.
   His departure, following those of former CEO Gerald Levin and former COO Bob Pittman, should at last allow for a much-needed clearing of the air at AOL Time Warner, with new executives in place and a new online strategy announced just last month.
   It also eliminates the need for what would surely have been an ugly, months-long campaign to rid the company of him. Although Case had powerful opponents in the form of Turner, Liberty Media's John Malone and Capital Research & Management's Gordon Crawford, who between them own about 18 percent of the company's stock, it's not clear whether they could have mustered the votes of 11 board members, out of a total 14, as needed under the company's bylaws to evict a sitting chairman.
   But the inevitable blanket coverage of the boardroom battle would have been hugely damaging to AOL Time Warner, which has received virtually nothing but bad press of late.
   Following Case’s announcement, Turner was gracious in victory, saying in a statement, "I admire Steve Case's decision to put our company and its employees first and am delighted that he will remain on the board and be active, because frankly, we really need his experience and vision."

-Jeff Bercovici is a staff writer for Media Life.

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