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Case Calls For Time Warner-AOL Split

UPDATED:Steve Case, the co-founder of AOL and chief architect behind the company's merger with Time Warner, says it is time the pair say goodbye.

"Although I played a key role in bringing AOL and Time Warner together six years ago, it's now my view that it would be best to 'undo' the merger by splitting Time Warner into several independent companies and allowing AOL to set off on its own path," Case wrote yesterday in an essay published in The Washington Post.

Case, who resigned from the Time Warner board of directors in October to devote more time to his new company, Revolution, said expectations that "AOL's Internet mentality would accelerate growth at Time Warner" and the belief that Time Warner would "speed up AOL's transition from phone dial-up to broadband" had failed to materialize.

Case also said possible mergers with other Internet companies -- most notably rumors of potential deals with Microsoft or Google -- would not help the struggling AOL.

"Given that Time Warner failed to capitalize on AOL's potential during a period when it owned 100 percent of AOL, it seems doubtful that a scenario in which it has a lesser, but still controlling, stake will work better," he wrote.

Case also said the association with Time Warner has weighed AOL down, while its competitors, such as Google and Yahoo , have made important strides forward.

"Time Warner has proven to be too big, too complex, too conflicted and too slow-moving -- in other words, too much like a classic conglomerate -- to seize new opportunities," Case wrote.

In an e-mail response to internetnews.com, Kathy McKiernan, vice president of corporate communications at Time Warner, said:

"We respect Steve's views as a shareholder. As Steve is aware, these views have been carefully considered by Time Warner's board and management, together with outside advisors, and we have concluded that there is no evidence that the steps he has proposed will improve shareholder value.

"Our board and management have turned around the company, put it on a growth path and are committed to delivering true value to all our shareholders."

Case said he proposed to the company's board in July that it was time to "liberate" and split the media conglomerate into four companies -- Time Warner Cable, Time Warner Entertainment, Time Inc. and AOL.

Case suggested in the essay that a "stand-alone" AOL could possibly see a renaissance in its brand, comparing the company's future prospects to that of a rejuvenated Apple.

"Apple is now more valuable -- and more relevant -- than ever. Liberated to pursue its own future, AOL could have an Apple-like renaissance," Case wrote.

"There is no firm better positioned to become the preeminent Internet-based phone company of the 21st century. With nearly 100 million instant messaging users sending billions of messages each day, AOL is already one of the nation's leading communications companies," he wrote.



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