Time Warner to Pay $2.4 Billion to Settle AOL Suits

Aug. 3 2005
Bloomberg

Time Warner Inc., the world's largest media company, agreed to pay $2.4 billion to end shareholder lawsuits stemming from its 2001 merger with America Online. The settlement caused the company's first loss in almost three years.

New York-based Time Warner took a $3 billion second-quarter expense related to the lawsuits, resulting in a net loss of $321 million, or 7 cents a share. Revenue fell 1.1 percent to $10.7 billion, the company said in a statement today. Excluding the payment, profit and sales missed analysts' estimates.

Settling the cases ends the bulk of the litigation brought after AOL bought Time Warner for $124 billion in 2001. The stock plunged after the deal as growth slumped, prompting shareholder suits that claimed AOL inflated sales to help close the transaction. Chief Executive Richard Parsons can now focus on bolstering sales, which fell in the quarter for the first time since 2003...