Stephen M. Case, the co-founder of AOL, says he would support “undoing” the merger of Time Warner and AOL, essentially aligning himself with financier Carl C. Icahn who has been pushing for a break-up of Time Warner. According to a report in the New York Times, Case’s comments in an essay in The Washington Post highlights the mountain of ill feelings that still surrounds the $112 billion merger of AOL and Time Warner at the height of the Internet bubble five years ago. In the essay, Case revealed for the first time that in response to the company’s languid stock price, he suggested last July the board should split into four pieces: Time Warner Cable; Time Inc., the magazine business; Time Warner Entertainment, housing its TV and film businesses; and AOL. The proposal was rejected by the board, and Case resigned in October to focus on new business ventures.
His comments came after a week of sniping between Icahn, who controls three percent of the company’s shares, and Richard D. Parsons, Time Warner’s chief executive. Parsons is under increasing pressure to justify to investors that it makes sense to keep a diverse company with $40 billion in annual sales intact, at a time when some other media conglomerates are splitting up or shedding assets.
At present, Icahn’s campaign against Time Warner does not pose much of a threat to the company because of its sheer size: it has a market value of $82 billion and is owned by vast numbers of stockholders. Neither Case nor Icahn could exert much influence over the company’s direction, on their own or together. And Icahn’s attacks have prompted several big-name corporate leaders to call Mr. Parsons to express their support, including Rupert Murdoch of the News Corporation, Jeffrey R. Immelt of General Electric, Sir Howard Stringer of Sony, Kenneth I. Chenault of American Express and the financier John Utendahl.