CASE DEFENDS AOL-TIME WARNER MERGER

By: Paul Bond Says ABC Blackout Was 'Dumb'



(The Hollywood Reporter) LAGUNA NIGUEL, Calif. America Online chief
Steve Case told an intimate gathering of the nation's top Internet
executives that the infamous blackout of ABC that resulted from the
Time Warner-Disney dispute was a major gaffe on the part of Time Warner.



'A really dumb thing to do,' Case said.



The decision to block the ABC signal over some Time Warner cable
lines resulted in increased scrutiny from antitrust regulators, Case
said, and they are the regulators now weighing a proposed merger of
Internet giant AOL with media juggernaut Time Warner.



'It was particularly dumb because it was self-inflicted,' Case said
during a presentation at the Internet Summit, an invitation-only event
considered by many to be the most important conference in the online
space.



Case told Morgan Stanley Dean Witter top Internet analyst Mary Meeker
during a question-and-answer session that the ABC fiasco was one of
two major disappointments since AOL and Time Warner announced a
planned merger this year. 'And it won't happen again,' he said of
the actions taken by Time Warner during the ABC dispute.



The second disappointment, Case said, is Wall Street's lukewarm
assessment of the proposed deal. AOL has been stuck in a trading
range mostly below $60 per share since the merger plan was made
public. That's more than 35% off AOL's all-time high.



'AOL Time Warner will be better than people expect,' Case said,
adding that it's his goal to make the new company the most valuable
and well-respected in the world.



Case said Time Warner's vast assets appear as 'disconnected silos,'
which will be brought together via the merger.



And though the merger hasn't yet been blessed by antitrust regulators,
Case joked how already he has been labeled at the Internet Summit as
chairman of AOL Time Warner, the company's postmerger moniker. And
the two companies have already held a joint board meeting, Case was
careful to point out, attended by Ted Turner. Press speculation
alleged that Turner had become disillusioned with the merger because
of his perceived decreased executive role in the future AOL Time Warner.



Case said he had considered a merger with a major entertainment
company for about two years before the Time Warner deal was struck
but that he needed to sufficiently grow the company before such an
acquisition could be made. AOL went public in 1992 and grew to a $130
billion company from a market cap once as small as $70 million.



'Timing is everything,' he quipped.



Everyone had theories about why AOL and Time Warner were interested in
a marriage, Case said. But the reason is this: 'Something has changed.
The next 10 years will be very different from the last 10 years. The
big change is that the much-talked-about convergence is now really
going to start happening.'



Case also advised Internet executives, especially those in the music
and entertainment space, to ensure that each new technology is a
positive development and doesn't run afoul of the law. Government
regulators and lawmakers should not be looked upon as enemies, he
said.



He said music labels have legitimate complaints with such companies
as Napster and MP3.com. But, he suggested, traditional music executives
should not simply view such disputes as a litigation exercise. They
should use them to innovate.



The Internet Summit is hosted by the Industry Standard magazine.







~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~







(c) Copyright 2000, Editor & Publisher