AOL Time Warner’s Case in Question

Criticized for staying behind the scenes for much of the last year, AOL Time Warner Inc. Chairman Steve Case is under pressure to stage a comeback.

Some company executives want Case--the billionaire founder of America Online--to move his full-time office from the Internet company’s old headquarters in Virginia to New York, where most of the big decisions are now made.

Others hope Case will take a more visible role on Capitol Hill, lobbying legislators and regulators.

And after Chief Executive Gerald Levin this month announced his intention to retire in the spring, company executives began referring to Case as the company’s “active chairman,” a subtle attempt to stress Case’s growing involvement.

“The big question now is what is Steve Case going to do,” one former executive said following Levin’s retirement announcement. “And what has he been doing?”

A year ago, when Case and Levin were marrying their companies, many pundits predicted that Case would emerge as a major force, using his Internet savvy to position the company for the future.

But after pulling off his well-timed acquisition of Time Warner, Case largely faded into the background, rarely granting interviews and seldom being seen publicly or at the company’s Rockefeller Center headquarters.

“Where’s Steve?” blared a recent headline in Fortune magazine, which is part of the AOL Time Warner family. At an investment conference last month, Case was asked where he’d been “hiding.”

Case, 43, declined to comment, as did other AOL Time Warner executives.

Company insiders said Case has spent much of his time over the last year in California, where his brother, investment banker Dan Case, is battling cancer.

At a recent investment conference, Case stressed that, as chairman, he no longer is responsible for making day-to-day decisions, a job he happily left to Levin and Co-Chief Operating Officers Richard Parsons and Robert Pittman.

“I’m not the six-month guy,” Case said. “I’m the five-to-10-year guy.”

But other than helping negotiate a strategic deal with Sony Corp. this fall and hiring a new top lobbyist in the Washington office, Case’s imprint on important decisions at AOL Time Warner has been hard to find.

Though Case has been charged with finding strategic acquisitions, it was Levin who took the lead in AOL Time Warner’s failed bid to purchase AT&T; Corp.’s cable business, even though Case was skeptical. AT&T; said last week that it would merge instead with Comcast Corp.

International expansion was another of Case’s goals, but it was Levin who journeyed to China this fall to smooth the Internet unit’s entry into the giant market.

And although Case is charged with setting long-term strategy, Levin drafted the company succession plan, which selected Parsons as the next CEO instead of Pittman, Case’s former right-hand man.

Some say Case’s low profile during the first year of the merger--intentional or not--has served the company well because it allowed Levin to emerge as the undisputed leader.

Unlike most other mergers involving power-sharing agreements between high-profile corporate executives, the AOL-Time Warner marriage has generated relatively few reports of back-room friction and power struggles.

“Case played his role well and did a very good job at bonding with Jerry Levin,” said Adam Klein, lead partner of the media and entertainment practice for Booz-Allen & Hamilton. “There was no struggle and that was a huge contribution.”

But others say it will become increasingly difficult for Case to remain in the background, particularly as the company shuffles its management team and the media industry gears up for another consolidation wave.

AOL Time Warner’s failed bid for AT&T;’s cable business and recent deals announced by rival Vivendi Universal are raising questions about AOL’s next move. Some predict the company will make several acquisitions, including beefing up its broadcasting assets.

Because of Case’s successful track record in making acquisitions, Wall Street is eager to see him take a more active role.

“This was a good year for Case to be missing in action,” said Blair Levin, analyst at Legg Mason. “It was a time to be highly operational. But next year will be a time to be highly strategic. We’re at a moment in which the strategic thinking he brings to bear is going to be enormously important.”

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Steve Case

Chairman, AOL Time Warner Inc.

Age: 43

Home: McLean, Va.; plus a 22,000-acre Grove Farm property in Hawaii, where he was born and raised

Family: Wife Jean and five children

Wealth: $1.1 billion, according to Forbes

Background: A former Pizza Hut manager who caught the Internet bug early and helped found AOL, one of the first online companies. At the peak of the technology boom, he bought Time Warner for about $100 billion.