AOL makes its case

Interview sets off rumors of AT&T merger

The mega-merger rumor mill hit full steam on Thursday when comments by America Online Inc. chairman Steve Case, made during an interview, set off a flurry of speculation about a partnership between the world’s largest Internet service provider and AT&T.

In an interview with Bloomberg News in New York, Case said: “We’re having discussions with AT&T. There’s a variety of things we could do together… it’s reasonable to expect partnerships in the not-too-distant future and with a variety of partners.”

Stocks soar

Case declined to give specifics, but his words were enough to send the stocks of AOL and Time Warner soaring.

On Thursday, AOL closed at $61, up 11% from Wednesday’s close. Time Warner closed at $86.87, up 9.5%. Shares of AT&T fell by 38¢, closing at $52.63.

AOL spokesmen did not return callsseeking clarification of Case’s remarks.

‘A lot of possibilities’

When asked to respond to Case’s comments, AT&T spokeswoman Adele Ambrose said the furor surrounding the remarks was much ado about nothing.

“We’re talking to a lot of people about a lot of possibilities,” she said. “We said that with the AOL/Time Warner agreement our interests are more aligned than they were before. But any suggestion that this is new news or something is imminent would not be accurate.”

AT&T has an exclusive agreement with Excite@Home to offer broadband Internet access. Ambrose said the discussions with AOL do not violate this contract. Case has said the broadband lines operated by Time Warner will be opened to competing Internet service providers if the merger goes through.

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