The Case for a sale
Former chief: AOL should log off TW
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In a long op-ed in Sunday's Washington Post, the usually tight-lipped former AOL prexy criticized the current setup of AOL within the conglom and encouraged the company to sell the Internet division.
Sounding a Carl Icahn-like note, Case also advocated the splitting up of Time Warner into several companies, consisting of independent publishing division Time Inc., film and TV operation Time Warner Entertainment and Time Warner Cable, in addition to the AOL sale.
Case acknowledged that the utopia of a combined content and distribution company at AOL Time Warner never materialized. But he carefully avoided taking responsibility for the unwieldy merger he helped construct.
In fact, he expressed frustration at the conglom culture's effect on his former company. AOL "must be freed from its corporate shackles and return to its entrepreneurial roots, identifying ideas early and promoting their widespread acceptance," he said.
He did suggest that had his former company been better integrated into Time Warner, it would have seen more benefits.
Speculation about an AOL sale has been circulating for several months, with Microsoft, Yahoo! and Google all figuring into talks, and a number of partial ownership scenarios described. Case said wholesale separation between the two companies was the best course.
"Given that Time Warner failed to capitalize on AOL's potential during a period when it owned 100% of AOL, it seems doubtful that a scenario in which it has a lesser, but still controlling, stake will work better."
Case no longer sits on the Time Warner board -- he now runs a venture-capital firm called Revolution -- but he does hold a significant stake in Time Warner. It's likely he hopes a sale would allow company's share price to rise higher -- and alleviate his personal responsibility for TW's low share price.
Though Icahn has made the AOL-Time Warner merger a centerpiece of his campaign against TW management, Case said he found himself aligned with the corporate raider. Case said he had expressed de-merger ideas "long before" Icahn had, though he has never spoken with him.
Case cited the spinoff of Warner Music earlier this year as a successful precedent for other spinoffs.
Comments by a former exec are unlikely to directly spur a company to take a major action like a spinoff, but they could add pressure by increasing investor ire over a lagging share price.
Commentary continues the drumbeat for conglom splits, a process already under way at Viacom.
The piece also showed what a difference six years makes. Case once argued that AOL and TW made sense because bigger was better.
In the op-ed, however, he sang a different tune: "Within a multibillion-dollar conglomerate," he wrote, "emerging opportunities are often ignored until it's too late."
