NEW YORK (The Hollywood Reporter) — Steve Case, who co-founded America Online and was one of the architects of the much-maligned AOL-Time Warner merger, said Oct. 31 that he has resigned from TW’s board to focus on media investments via privately held Revolution LLC, which he launched this year.
As Case’s departure follows the exits of former TW CEO Gerald Levin, and AOL and AOL TW top executive Robert Pittman, TW chairman/CEO Richard Parsons is the last man standing out of the top four officials that launched the AOL-TW era.
Case stepped down from his role of chairman in May 2003, and Parsons added the chairman title to his role of CEO. Because of repeated shareholder criticism of his role in the AOL-TW deal, industry observers have been expecting that Case would call it quits on his terms at some point.
His departure means Case will avoid running for re-election as a director at what could become a contentious annual shareholder meeting for TW in the spring. A group of dissident shareholders led by former corporate raider Carl Icahn has pushed for bigger stock buybacks and a complete spin-off of TW Cable and has threatened they could nominate alternative board candidates if its demands are not met.
“Leaving Time Warner’s board will give me a greater opportunity to grow Revolution, including avoiding any potential conflicts of interest as Revolution moves into new areas,” Case said in a statement on Oct. 31, without detailing these possible conflicts for him and the possible new areas of business for Revolution.
He added that he plans to remain one of TW’s largest individual shareholders. “As such, I will remain actively engaged as strategies for AOL’s future are considered, and as steps are taken to maximize Time Warner shareholder value,” Case said, again not providing further specifics.
Revolution officials couldn’t be reached for further comment Oct. 31.
However, Parsons in a statement said that “as Steve is one of our major individual shareholders, we’ll look forward to his wise counsel as the company continues to move forward.”
Long seen as a drag on TW’s financial growth, AOL has as of late taken the spotlight as management has discussed potential deals with Microsoft Corp., as well as Google Inc. and Comcast Corp. These deals could bolster AOL’s online advertising business and future growth prospects, according to analysts.
Case on Oct. 31 said he was pleased with the renewed focus on the AOL business. “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,” he said. “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.”
In the past, rumors had circulated in the industry that Case could lead a buyout of AOL to take back control of the company.
However, he has been focusing on privately held Revolution, which launched in April and which he leads as chairman/CEO. The firm is “building innovative businesses that provide consumers with more choice, convenience and control,” Case said Oct. 31.
Revolution this year started a buying spree, funded in part by $500 million of his own fortune, focused on the health care market. For example, the firm bought cable network operator Wisdom Media Group and a $20 million stake in Gaiam, a provider of health and fitness products.
According to a filing with the Securities and Exchange Commission in September, Case owned about 15.1 million TW shares. According to Bloomberg, TW has nearly 4.55 billion shares outstanding. That means Case’s stake in the world’s largest media conglomerate amounts to about 0.33%.
Board member Ted Turner is considered TW’s largest individual shareholder. Early this year, Turner reported to the SEC that as of the end of last year he owned more than 31.8 million TW shares, which would give him a stake of about 0.7%.
Case’s resignation brings TW’s number of board members to 14. The company didn’t immediately say whether it would replace Case.
“I thank Steve Case for his years of distinguished service to our company,” Parsons said Oct. 31. “We have great respect for his long record of achievement — as a co-founder of AOL to a valuable member of our board.”