AOL Time Warner: A Merger Gone Wrong

He was to continue as a director of the company and as the co-Chairman of the strategic committee. This development generated great interest in the media worldwide because of reports that a few shareholders had been plotting to 'dethrone' Case at the annual meeting of the company to be held in May 2003. Many shareholders were angry with Case for creating a merger that was 'on many accounts heading towards a failure.' Reports stated that shareholders of the merged company held Case responsible for the steep decline in the share price and the profitability of the company in the market after the merger (post merger, the AOL TW stock had lost 60% of its value). Reportedly, the top brass of Time Warner also accused Case of forcing the loss making AOL onto the profit making Time Warner and reducing the latter's profitability.

After the merger, a shareholder of the company commented, "There is no shareholder in the company of any substance that wants him around. There is nobody at the Time Warner company that wants him around. I do not think the majority of the board wants him around. So his only constituency is the AOL board members. That is all that stands between him and the door." Case said that 80% of the decline in AOL's share prices after the merger was announced was due to circumstances beyond his control. Commenting on the decline in profits of AOL TW, Case agreed that things did not go as planned post merger. He said, "Perhaps it is a lesson learned - even though you think you may be right, if the environment is such and the facts are such, it requires you to take a more pragmatic way and perhaps a more selfless view. That is what you have to do.