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Associated Press
AOL Chairman Steve Case says the stock market's
reaction has been one of the biggest negatives
of its merger with Time Warner.

Case sees more
media mergers

By Hui-yong Yu
Bloomberg News

DANA POINT, Calif. -- Steve Case, who will be chairman of the combined AOL Time Warner, said the push to deliver information and entertainment across computers, television, and the telephone will drive more mergers between Internet and media companies.

"The whole notion of convergence will redefine the industry," said Case, America Online Inc.'s chief executive, during an interview by Morgan Stanley Dean Witter & Co. analyst Mary Meeker at the Internet Summit conference in Dana Point, California, sponsored by The Industry Standard magazine.

AOL, the biggest Internet service provider, and Time Warner Inc., the biggest media company, plan a merger now valued at $159 billion. "We'll see other mergers like that," he said.

Case said cross-marketing the combined pool of about 130 million subscribers among AOL, Time Inc., and Turner Broadcasting are among the biggest benefits of the merger. He said there are only three overlapping advertisers among the top 100 advertisers of each of the three companies.

"Almost every category" of content within the combined AOL Time Warner such as AOL's stock quote service and Time Warner's Money magazine and CNN financial news offers opportunities for new consumer offerings, Case said. "We're still in the early stages of figuring this out," he said.

Case indicated that while consideration of a merger with Time Warner was fairly recent, he said he'd been thinking about the possibility of linking with another company for "a couple of years."

In response to a question from Meeker, Case said one of the "biggest positives" about the merger was Time Warner management's enthusiasm about the Internet.

Based on visits to Time Warner operations, including the Atlanta headquarters of CNN and the entertainment units in Los Angeles, "my impression was Time Warner was a bunch of silos run separately. That probably made sense the last decade. This merger is the catalyst to reinvent their company as well as ours," said Case.

The "biggest negatives" so far, he said, have been the stock market's reaction and Time Warner's dispute with Walt Disney Co.'s ABC television network that kept ABC programs off Time Warner's cable systems. "It was a really dumb thing to do and it was particularly bad because it was self-inflicted."

Case suggested the company's plan to deliver consumer offerings on a variety of devices won't extend to bidding for third-generation cellular spectra soon to be auctioned. "We have no particular need to be in the carrier business. There are other ways to play."