Steve Case's staying power put to the test at AOL -- Again

Will Steve Case survive as chairman of AOL Time Warner Inc., the world's biggest media and Internet company, during 2003?

That central question is on the minds of AOL watchers, subscribers and investors as the new year begins.

Operating from America Online Inc.'s headquarters near Dulles International Airport, where the online division has more than 3,000 employees, Case has drawn the ire of major shareholders, including media maverick Ted Turner, who have lost billions of dollars since AOL merged with Time Warner Inc. in January 2001. They suspect he must or should have known that AOL's high-flying stock, the currency used to make the biggest acquisition ever, was headed for a crash landing, because the company's business prospects were sluggish even though they appeared robust.

Their fury also has been fueled by Justice Department and Securities and Exchange Commission probes into AOL's accounting. Investigators are focusing on deals that artificially inflated revenue and profit.

AOL's decision recently to restate results after improperly booking $190 million in revenue before and after the merger has added to the combustible blend of elements that experts say will test Case's staying power in the months ahead, as the corporation's annual meeting approaches in the spring.

Whatever the outcome, Case -- born and raised in Hawaii before making Northern Virginia his home -- is a savvy dealmaker and corporate operator worth watching closely. The co-founder of the company that introduced the Internet to the masses knew when to sell hundreds of millions of dollars of his own AOL shares in the late 1990s, long before its share price plunged, and had the moxie to pull off the $112 billion stock deal with Time Warner.

The merger helped ensure that the Internet progeny he created and nurtured would survive the dot-com meltdown by attaching itself to the granddaddy of old media, the Time Warner stable of magazines, recording artists and movie studios.

News source: The Washington Post

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