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AOL founder Case resigns Time Inc. board

By
T.K. MALOY, UPI Deputy Business Editor

WASHINGTON, Oct. 31 (UPI) -- The resignation of Steve Case, co-founder of AOL, from the board of parent company Time Warner Inc. brings a symbolic end to the now-dated hopes of synergy between the two companies.

Case said he would devote his time to expanding his new firm, Revolution LLC, an investment group specializing in health and wellness programs as well as leisure and tourism.

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"Leaving Time Warner's board will give me a greater opportunity to grow Revolution, including avoiding any potential conflicts of interest as Revolution move into new areas," Case said in a statement.

He added, "As the co-founder of AOL, I continue to have a special pride and passion for AOL, and I strongly believe that AOL -- once the leading Internet company in the world -- can return to its past greatness. Over the past few months, I have been pleased to see a renewed focus on AOL at Time Warner, and the emergence of so many strategic alternatives."

Case said he will remain one of Time Warner's largest individual shareholders.

Dick Parsons, Time Warner's chairman and chief executive officer, said: "On behalf of Time Warner's Board of Directors and senior management team, I thank Steve Case for his years of distinguished service to our company. We have great respect for his long record of achievement -- as a co-founder of AOL to a valuable member of our board. As Steve is one of our major individual shareholders, we'll look forward to his wise counsel as the company continues to move forward. He will be missed."

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Case, who had previously relinquished his title of chairman in 2003, had remained on the board even after heavy investor opposition stemming from the failed state of the Time merger with AOL.

The AOL merger had become the source of much criticism in recent months for acting as a drag on its parent, the old media giant Time Warner Inc., which had bought the then-hot new media property at the beginning of 2001. It was supposed to be a new era in multimedia.

Prior to the merger, both companies emphasized to the financial markets the various business synergies that would come from the marriage of technology (AOL) and content (Time Warner). AOL based its value on its on millions of subscribers, many of whom spent then -- and still spend now -- hours a day on the AOL service getting their news, chatting with friends and buying products from a myriad of AOL merchant partners.

The Time Warner division of the merged company was the world's largest media company. Through its Time Entertainment unit, it owns Time Warner Cable as well as Warner Bros. Through its TBS subsidiary it owns CNN, New Line Cinema and the Atlanta Braves. The publishing arm -- Time Inc. -- is one of the top publishers in the United States. The company's Warner Music Group has an array of record labels, including the famous Atlantic and Elektra.

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The new name at the time of the merger was AOL Time Warner. The synergy, however, didn't happen. Ultimately over $200 billion in shareholder value was wiped out from AOL Time's stock.

Among other problems, the once-highflying AOL has actually been losing subscribers to its ISP service in the last several years, dropping from over 30 million to a current estimate of around 20 million. This, though, it should be noted, still makes AOL one of the world's largest ISPs.

Time Warner now considers AOL a division of the larger company but has dumped the name from its overall title -- a move that was hailed by the market at the time.

Other top executives involved in the merger have left over the last several years, including Time's former head Gerald Levin and former AOL executive Bob Pitman.

In a large shift of strategy in June, AOL began putting more emphasis on the Internet at large -- and the possibility of gaining advertising from a Net portal -- vs. just the ads within its own subscriber-only domain.

It has been report in recent weeks that a number of online titans are interested in gaining a stake in AOL. Possible partners include Yahoo! Inc., News Corp., Google Inc., Comcast Corp. and Microsoft Corp.

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Among the assets that suitors are interested in getting access to is AOL's popular AIM instant-messaging service, which dominates the instant-messaging market. Also, the AIM service has entered the telecom market by allowing users to call each other from computer to computer via headsets.

Other AOL properties that are attractive to outsiders are MapQuest and Moviefone for movie listings. Additionally, AOL Music proved itself a killer application this summer with the airing of the Live8 concert, which garnered millions of listeners.

In midday trading Monday, shares of Time Inc. were trading at $17.96, up 21 cents or 1.18 percent.

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