×
You will be redirected back to your article in seconds

AOL TW has a tough Case

Conglom faces up to 30 shareholder lawsuits

AOL Time Warner chairman Steve Case will likely weather a board meeting Jan. 16 with his title intact, but shareholders could oust him at the company’s annual meeting in May.

That’s when stockholders will vote on numerous corporate matters, including a slate of directors the company will present in a proxy statement to be put out in late March.

In the past, issues from executive compensation to pension plans have been routinely approved. But AOL TW shareholders are a very angry bunch, and many are howling for Case’s blood — from small investors to heavyweights like board member Ted Turner, Capital Research & Management’s Gordon Crawford and Liberty Media’s John Malone.

‘Still an issue’

Debate over Case’s future role “may have died down in the press, but it’s still an issue to me,” said one shareholder, who hopes he won’t see Case’s name in the proxy. That means a divided board would have to oust the chairman first, which requires an onerous 75% vote. In 2004, the board will only need a simple majority.

Former AOL TW CEO Gerald Levin quit last year before the annual meeting, where he made a teary farewell appearance. So far, Case has given no indication he’s willing to fall on his sword. So his face, and the letters A-O-L in the company’s name, continue to draw the venom of shareholders and employees.

“Steve says to this day, ‘Oh well, my shareholders were really upset with me when I did this Time Warner deal.’ Come on, give me a break,” a vitriolic Malone says on CNBC’s “The Big Heist,” a two-hour analysis of the disastrous merger that airs tonight.

As for Levin, Malone says, “This was Gerry’s personal decision, maybe his personal Waterloo. I mean, what did Napoleon talk about before he invaded Russia? I’m sure Napoleon was looking at it and saying, ‘Boy, I can make history bigtime if I pull this off.’ So he wasn’t out there talking to naysayers.”

News Corp. chairman Rupert Murdoch believes first and foremost that AOL TW “needs a unified board right now. They need a very pragmatic board to turn its head to making more profits. It’s been (handed) billions of dollar of debt from this deal. They’ve got to dig themselves out of that.”

Viacom topper Sumner Redstone said, “It was impossible to overestimate the extent to which AOL was, in fact, overvalued.”

And NBC topper Bob Wright wouldn’t be surprised if the company “went back to Time Warner … if AOL went on to become like the Blockbuster model, in the way that Blockbuster supports Viacom, as opposed to the frontrunner of what Time Warner is all about.” In reality, that happened months ago.

Slow growth at America Online forced AOL TW to lower its inflated financial forecasts. And the Justice Dept. and Securities & Exchange Commission are examining whether the books were cooked at the Netco. AOL TW has acknowledged potential lapses at AOL by restating revenue for eight consecutive quarters after the deal closed.

Official complaints

There are at least 30 shareholder lawsuits pending against the conglom alleging material misrepresentation and/or omissions of material fact in violation of securities’ law. Some employees, whose 401(k) plans have been decimated, are suing the administrative committee of the AOL Time Warner Savings Plan for violating the Employee Retirement Income Security Act.

Meanwhile, exposes, analyses and critiques of the merger that failed keep on coming, two years after the deal closed and three years after it was first announced. There’s new management throughout the corporate ranks. Time Warner’s Richard Parsons, Jeff Bewkes and Don Logan are in the top operating jobs and newcomer Jon Miller is heading up AOL.

Changing the name back to Time Warner would remove an irritant and take some pressure off the Net unit, making it just one arm of a giant conglom. (After all, Warner Music hasn’t been doing so well either.) Case’s exit would do the same, although it wouldn’t make much of a difference in the company’s operations. If he’s still around in May, AOL TW promises one heck of an annual meeting.

Popular on Variety

More Scene

  • Taron Egerton Elton John Rocketman Live

    Elton John and Taron Egerton Duet at 'Rocketman' Awards Season Event at the Greek Theatre

    “Rocketman” has officially launched into awards season. Paramount hosted a screening of the film with a live-performance of the score by the Hollywood Symphony Orchestra and a headlining performance by Elton John and the film’s star Taron Egerton. John and Egerton — who is in contention for best actor for his portrayal of the singer [...]

  • Hailee Steinfeld Dickinson Premiere

    Hailee Steinfeld, Jane Krakowski on What Modern Women Can Learn From Emily Dickinson

    Emily Dickinson lived in the 1800s, but if you ask the team behind Apple TV Plus’ upcoming series, “Dickinson,” her story is more current than ever. Hailee Steinfeld stars in the the modern-day retelling of the poet’s young life. The actress — who makes her first full-time foray into television with the role and also [...]

  • Don Cheadle

    ACLU Bill of Rights Gala to Honor Don Cheadle, Feature Appearances by Selena Gomez, Regina Hall

    The American Civil Liberties Union of Southern California will honor “Avengers: Endgame” and “Black Monday” star Don Cheadle at the organization’s annual Bill of Rights dinner on Nov. 17 at the Beverly Wilshire Hotel. Cheadle will be recognized for his activist work as an advocate for racial and gender equality, immigration reform, reproductive and LGBTQ [...]

  • Helen Mirren attends the LA Premiere

    Why Helen Mirren Considers Catherine the Great to Be 'Superhuman'

    It’s no secret that Dame Helen Mirren has a knack for nailing regal roles. Following her Oscar-winning on-screen reign as Queen Elizabeth II back in 2006, the thespian brings yet another powerful ruler to life in HBO’s limited mini-series “Catherine the Great.” Just as she does on the small screen as Russian Empress Catherine II, [...]

  • Taika Waititi Jojo Rabbit Premiere

    Why Director Taika Waititi Decided to Play Adolf Hitler in 'Jojo Rabbit'

    “Fox Searchlight blackmailed me into doing it,” Taika Waititi told Variety of playing Adolf Hilter in “Jojo Rabbit” at the film’s premiere at American Legion Post 43 on Tuesday night in Hollywood. Staying mum when asked which other actors had been on his wish list to play the role, Waititi explained why he eventually decided [...]

  • Jessica Biel Limetown Premiere

    Why 'Limetown' Star & Producer Jessica Biel Thought the Show Was Based on a True Story

    In a world of increasingly outlandish headlines, the story behind “Limetown” — in which an entire community in rural Tennessee disappears overnight — seems plausible. Even Jessica Biel, who executive produces and stars in the Facebook Watch television adaptation of the hit 2015 podcast, was initially convinced that it was real. “I just thought I [...]

More From Our Brands

Access exclusive content