Malone Eyeing AOL Time Warner Board?

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AOL Time Warner Inc. CEO-in-waiting Richard Parsons may have yet another
strong voice on his board of directors to contend with -- Liberty Media Corp.
chairman John Malone -- according to the company's 10-K annual report filed with
the Securities and Exchange Commission Monday.

Liberty, which has a 4 percent nonvoting interest in AOL Time Warner, asked
the Federal Trade Commission March 19 to eliminate the voting restriction on its
AOL Time Warner stake, according to the SEC document.

That would put Liberty on par with AOL Time Warner vice chairman and board
member Ted Turner, who owns 3.6 percent of company stock, or about 155 million
shares.

Liberty was a big shareholder in Turner Broadcasting System Inc., and it
received its stake as part of Turner's merger with Time Warner Inc. in 1996. But
because Liberty was part of the largest cable operator at the time --
Tele-Communications Inc. -- the FTC prohibited it from having voting rights.

Since then, TCI was acquired by AT&T Corp. and Liberty was spun off as a
separate programming entity, eliminating any conflict of interest with AOL Time
Warner.

Most analysts believe Liberty is making its request to gain a seat on AOL
Time Warner's board for Malone. That would give Parsons, who is expected to
replace retiring CEO Gerald Levin in May, two outspoken and opinionated board
members to contend with: Turner and Malone.

But that could be the least of Parsons' problems. Also according to the
annual report, AOL Time Warner said it is negotiating with the Newhouse family
regarding its Time Warner Entertainment-Advance/Newhouse cable partnership.

Advance Newhouse owns 33.3 percent of the partnership, which controls about 7
million cable subscribers. Newhouse could opt out of the partnership April 1 and
take around 2 million cable subscribers with it.

AOL Time Warner said that although it could not guarantee any outcome, one
possible scenario could involve it purchasing Newhouse's interest in the Road
Runner high-speed cable-modem venture as part of a TWE-A/N restructuring or in a
separate transaction.

AOL Time Warner also said it would take a $54 billion noncash charge to
earnings in the first quarter -- the largest such charge in U.S. corporate
history -- for the impairment of goodwill and other intangible assets resulting
from the America Online Inc.-Time Warner merger.

In January, the company said it expected the charge to be in the $40 billion
to $60 billion range.

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