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.

Get the Free Newsletter!

Subscribe to our newsletter.

Subscribe to Daily Tech Insider for top news, trends & analysis

News Around the Web