Investors Unfazed by Case's Departure - Multichannel

Investors Unfazed by Case's Departure

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Investors didn't appear upset that former AOL Time Warner Inc. chairman Steve
Case threw in the towel Sunday night, driving the stock up as much as 3.5
percent in early trading Monday.

Case made the surprise announcement that he was stepping down as chairman --
but remaining on AOL Time Warner's board of directors -- almost three years to
the day of the anniversary of the mega-merger between America Online Inc. and
Time Warner Inc.

His resignation will take effect in May.

AOL stock rose as high as $15.40 per share in morning trading, up 52 cents,
or 3.5 percent, from its Friday close of $14.88. The stock finished up about 15
cents each at $15.03 per share in 4 p.m. trading Monday.

In a prepared statement, Case said he felt that the speculation surrounding
his continued tenure at the company had become a distraction. But in later
interviews, he appeared clearly torn by the decision to step down.

"I loved being chairman. I love this company," Case said in an interview with
Cable News Network Monday morning. "And so I have some mixed feelings about
stepping aside. But I do think it's the right decision."

He continued, "I've thought about this hard over the past few months and
decided that it shouldn't be about Steve Case and what he wants -- it should be
about the company and 90,000 employees of the company and the millions of
people, families who are investors in the company."

Case has been under fire
for months as the AOL online division has battled with a shrinking subscriber
base and a federal investigation into its accounting practices.

In addition, according to reports, three influential shareholders -- Capital
Research & Management Co. portfolio manager Gordon Crawford, Liberty Media
Corp. chairman John Malone and AOL Time Warner vice chairman Ted Turner -- have
privately been calling for Case's ouster for months.

AOL Time Warner did not name a successor to Case, fueling speculation as to
who will eventually take the spot.

The decision over who will become chairman will be made by AOL Time Warner's
board of directors, spokeswoman Tricia Primrose said. She added that the goal is
to have a new chairman before the company's annual shareholders' meeting in
May.

The logical choice appears to be current AOL Time Warner CEO Richard Parsons.
But some observers said that may be unlikely considering the pressure on
companies to keep their chairman and CEO roles separate in light of several
corporate scandals last year.

Turner is expected by many to be a long shot because of his history as an
outspoken and often controversial executive.

Case denied reports that he had lost the support of his board. In the CNN
interview, he said, "Only one investor ever came to me and suggested that I step
down, and only one director on our board ever came to me and suggested that I
step down. So I felt that I had considerable support, and that would likely to
be continued through the next few years."

As for candidates inside the company, AOL's board of directors is brimming
with possibilities: former Major League Baseball commissioner Fay Vincent, a
former executive at The Coca-Cola Co. and former CEO of Columbia Pictures;
Franklin Raines, CEO and chairman of mortgage lender Fannie Mae; James
Barksdale, venture capitalist and cofounder of Netscape Communications Corp.;
Reuben Mark, chairman and CEO of Colgate Palmolive Co.; Michael Miles, former
chairman and CEO of Philip Morris Cos. Inc.; and Daniel Akerson, who will be
stepping down as CEO of bankrupt XO Communications Inc. when its financial
restructuring is complete.

In a research report, Merrill Lynch & Co. Inc. media analyst Jessica Reif
Cohen speculated that Parsons could ascend to the chairman's spot, leaving the
CEO position for someone outside of the company, possibly Viacom Inc. president
Mel Karmazin.

Karmazin's contract at Viacom expires at the end of this year, and he has
reportedly locked horns with Viacom chairman Sumner Redstone in the past.
However, both men have stressed to Wall Street over the past several months that
their relationship is cordial.

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