AOL, T. Warner Shareholders OK Deal
Friday, June 23rd 2000, 12:00 am
By: News On 6
NEW YORK (AP) â€” Shareholders of America Online Inc. and Time Warner Inc. overwhelmingly approved the proposed combination of their two companies Friday, which would create a colossal media player. The ambitious pairing must still be cleared by U.S. and European regulatory agencies.
Shareholder approval had been widely expected but nonetheless symbolized a growing acceptance of the merger, which baffled investors when it was first announced Jan. 10. AOL stock declined sharply in the two months after the merger was made public, but has since stabilized.
Still, AOL's acquisition of Time Warner faces scrutiny from regulators at home and abroad, as well as opposition from consumer groups concerned about the growing concentration of media control in fewer and fewer hands.
A very public and ugly confrontation between Time Warner and The Walt Disney Co. that resulted in ABC being pulled from Time Warner cable systems in early May helped intensify those concerns. Consumer groups and rival companies want the government to force AOL Time Warner to guarantee access to its cable lines by other content providers and Internet service companies.
The European Commission announced Monday that it was extending its investigation into the merger, and reviews are also under way by the Federal Communications Commission and the Federal Trade Commission in Washington.
In the months since AOL and Time Warner unveiled their proposed marriage â€” which would combine Time Warner's music, movie and magazine content with the online distribution systems of AOL â€” other media companies have also been looking for ways to ensure their future in the digital age.
Just this week, Universal Studios owner Seagram Co. announced that it would be acquired by Vivendi, a French water company with a growing Internet and wireless business.
At the separate AOL and Time Warner shareholder meetings Friday, the mood was generally upbeat as executives took questions from shareholders and expressed optimism about the future of their combined enterprise, which will be based in New York and called AOL Time Warner.
At the Time Warner meeting in New York, Time Warner chairman Gerald Levin noted that Friday marked the 41st anniversary of the day Henry Luce, the founder of Time magazine, laid the cornerstone of the Time-Life building, where the meeting was being held.
``This building speaks more eloquently of the future than the past,'' Levin quoted Luce as saying at the ceremony in 1959. ``We salute the shape of things to come.''
The questions and comments from shareholders included a lament from one man who bemoaned the absence of CNN founder and Time Warner vice chairman Ted Turner, who has been said to be unhappy with the diminished role he will play in the new company. Turner is keeping his current title of vice chairman and getting a new one, senior adviser.
At the Time Warner meeting, 99 percent of shareholders casting votes approved the deal. In Vienna, Va., 97 percent of AOL shareholders there registered their support.
Time Warner chairman Levin will be CEO of the new company with responsibility for all day-to-day operations, while AOL chairman Steve Case will be chairman. AOL president Bob Pittman, who had previously worked at Time Warner, will become co-chief operating officer along with Dick Parsons, who is currently president of Time Warner.
During AOL's nearly two-hour meeting in a hotel ballroom, chairman Steve Case tried to allay concerns about regulatory concerns, the company's stock price and whether AOL executives' voices will be heard in the merged company.
``I'm quite confident that in Europe and around the world, there will be support for the merger,'' he said. ``Even though it is is big in size, it is different in character.''
The deal had been valued at $160 billion when it was announced Jan. 10, but lost a considerable amount of value due to a subsequent drop-off in AOL's stock price, which is being used as the currency to buy Time Warner.
AOL's stock was down $2.312 at $53.938 in afternoon trading Friday on the New York Stock Exchange, well below its level of $73.75 before the merger was announced. Time Warner shares, which have moved in tandem with AOL's for several months, were off $3 at $78.625.
At current levels, the deal is worth $122 billion.