The Telegraph
Since 1st March, 1999
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For AOL Time Warner, it’s a lost Case

New York, Jan. 13: Stephen M. Case, the former chief executive of America Online who engineered its acquisition of Time Warner, resigned Sunday night as chairman of the combined company, AOL Time Warner, bowing to shareholder anger over the dismal results of the merger.

He will remain as a board member. Case’s sudden resignation is the culmination of an 18-year rise on the crest of the internet boom, which took him from founding an obscure start-up betting on the future of an unknown medium to becoming the top executive of the world’s largest media company.

Now, he becomes the latest media empire builder to resign from the helm of a communications conglomerate in the boom’s aftermath, following the departures of Jean-Marie Messier from the chairmanship of Vivendi Universal and Thomas Middelhoff from the top job at Bertelsmann.

Over the last year, Case has come under mounting criticism from shareholders, board members and executives over the company’s deteriorating stock price and federal accounting investigations at his former company, AOL, which has turned into an albatross dragging down the combined company’s stock. The company’s shares have recovered from a low this summer, closing at $ 14.88 Friday, but they are still far from the $ 56 just after the merger.

Sunday night, Case said he resigned so that the simmering debate over his role at the company would not distract its management. The resignation will take effect in May.

In a statement released Sunday evening, Case said: “Given that some shareholders continue to focus their disappointment with the company’s post-merger performance on me personally, I have concluded that we should take steps now to avoid the possibility of that effort hindering our ability to pull together as a team and focus fully on our businesses.”

Speculation on a successor began immediately. Several people close to the board have said that as Case lost the support of some directors over the last 12 months it was Richard D. Parsons, the chief executive and a veteran of Time Warner who in effect ran the board meetings, making Parsons one natural choice to succeed Case as chairman.

Case acknowledged in an interview that he was unhappy to be leaving. “If nobody had raised any concerns and there wasn’t speculation and distraction over whether or not I would continue to serve as chairman, I would prefer being chairman,” Case said. “I would love to remain as chairman.”

Despite the mounting criticism, Case’s decision, or at least its timing, came as a surprise to many, even to those who know him. Before the holidays, he had indicated to colleagues that he intended to fight on, hoping to improve the AOL division’s performance and win back the allegiance of its investors and executives. But he faced a potentially stormy battle leading up to the company’s annual board meeting in May, when shareholders can express their views in the votes to re-elect directors.

“I am a fighter,” Case said Sunday night. “If it was just about tenacity, I will assure you I would continue to fight on, but it can’t just be about Steve Case and his character, if you will, it has to be about what is best for the company.”

Case added that he had decided to resign now because he felt the company had turned a corner, having named a new management team and devised a new strategy for the troubled AOL division.

“I felt that some of the foundation was in place,” he said. After leaving the chairmanship, he said, he will still play a role as the co-chairman of the board’s strategy committee.

Case said he reached his decision alone Friday night after deliberating over the holidays. He called Parsons on Saturday morning with the news.

Sunday night, Parsons said he accepted Case’s decision. “I was surprised but I understood it when he went through his reasoning,” Parsons said. “He did the right thing.” He said the board would decide on a new chairman over the coming months.

Three people close to the board said that although a few directors had previously criticised Case’s determination to remain as chairman, no specific precipitating effort or event forced him out.

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