Steve Case to quit as head of AOL Time Warner

Steve Case, founder of America Oline one of the 'fathers' of the internet is to step down as chairman of AOL Time Warner, the congolmerate he helped create which was hailed a marriage of old and new media, but now struggling for a future.

Mr Case's departure means the company's leadership will be without any of the key architects of the blockbuster merger of America Online and Time Warner in 2001. He is to step down in May.

In a brief statement, Mr Case said: "Some shareholders continue to focus their disappointment with the company's post–merger performance on me personally."

Analysts had speculated that an accounting scandal, along with anger about a drop of more than 60 pe rcent in the company's stock price, would eventually force him to resign. And his decision may have been hastened by recent reports of more financial problems at the company.

AOL Time Warner, which took a $54 billion charge last year to account for a decline in America Online's value, is expected to report another multibillion write–down later this month for the same reason – possibly in excess of $10 billion, according to some analysts.

The announcement came almost exactly two years after the company's big merger was finalised.

AOL Time Warner spokeswoman Tricia Primrose said Mr Case was not forced out; he made his decision Friday after months of consideration, and notified executives and the board over the weekend.

"He was aware that there had been some swirl about whether he should stay a few months ago," she said. "He knew that while it had died down, there was a possibility it could come up again as we headed toward the shareholder meeting in May, and frankly he wanted the company to be able to move forward without being distracted."

Mr Case will remain on the company board and continue to co–chair its Strategy Committee, although it remains unclear how much of an influence he – or his old company, America Online – will have on AOL Time Warner.

The announcement also raises questions about whether AOL Time Warner will change its name back to Time Warner to reflect the dominance of businesses in that part of the company. Those units, which include movie studios Warner Brothers and New Line Cinema, Time magazine, TV channel HBO and Time Warner Cable, continue to perform at or near the top of their industries.

"Mr Case's departure is the final step in new media's loss of control over Time Warner," said Dylan Brooks, senior analyst for Jupiter Research.

Mr Case, aged 44, co–founded Internet service provider America Online in 1985 and used its skyrocketing fortunes in 2000 to unleash the $106 billion acquisition of Time Warner's film, magazine and cable TV empire.

He presided over almost a decade and a half of remarkable growth at AOL, the first Internet company to be named to the Fortune 500. Many analysts credit the online service provider with almost single–handedly introducing Americans to the Internet, and investors soon took notice, bidding its stock into the stratosphere by the time of the merger.

AOL's takeover of Time Warner was initially promoted as an exciting example of a new economy business reviving an old one. With 35 million members worldwide, the service remains three times as large as its nearest rival, Microsoft's MSN service.

But its fortunes soured alongside other technology firms. AOL Time Warner stock closed Friday at $14.88 – more than 60 per cent below the $47 it traded at in 2001 when the merger was approved, and roughly 80 per cent below the $72 price tag it carried in 2000 when the merger was announced.