Turner Expected to Retire as AOL Vice Chairman

Ted Turner, who profoundly reshaped media and world news coverage, is expected to step down as vice chairman of AOL Time Warner Inc. when his contract expires in December.

AOL Time Warner would not comment on negotiations. Turner’s office referred calls to Time Warner. But the media tycoon, who revolutionized news by creating CNN as the first 24-hour network, has been unhappy with a reduction in his operating role that took effect in January, sources close to Turner said. They said the company offered a new contract, but that Turner refused.

In a restructuring last year to prepare for the merger of Time Warner Inc. and America Online Inc., Turner lost management control of the Atlanta-based Turner Broadcasting System, the cable group he founded and merged with Time Warner in 1996. Since January, the group--which includes CNN, TBS, TNN and the Atlanta Braves baseball franchise--has been run by AOL co-Chief Operating Officer Robert Pittman. He replaced several Turner lieutenants in a reshuffling that merged the cable channels with the company’s WB broadcast network.

Turner, AOL Time Warner’s largest individual shareholder with a nearly 4% stake, is expected to retain his seat on the board. Some cable executives who know him well wonder whether Turner will become a more activist director once he no longer holds an executive title.

The 62-year-old entrepreneur’s stock is worth far less today than it was before the AOL merger, when Time Warner shares traded as high as $100 a share. AOL shares closed Friday on the New York Stock Exchange at $33.81, down 29 cents, making Turner’s stake worth about $6 billion.

The voluble Turner, who once referred to News Corp. Chairman Rupert Murdoch as Hitler, also has an operating philosophy that runs contrary to AOL’s bottom-line orientation. Executives close to Turner say he disapproves of the deep cost-cutting initiated by AOL to meet financial projections that they say Turner views as overly optimistic in today’s harsh economic environment. Turner would prefer scaling back growth projections to continue to build during a slowdown rather than cutting so deeply into marketing and programming expenditures, these executives say.

What’s more, Turner is still seething from his thinly veiled demotion, which he learned about when the news release announcing the reorganization was faxed to him last May. He tells people he was fired from his job, although AOL Time Warner gave him the additional title as senior advisor.

In an April interview, Turner foreshadowed his retirement, telling the New Yorker: “My business side is coming to a close. It’s time for me to move on, anyway.”

Friends say Turner has been depressed by the change, which coincided with his divorce from actress Jane Fonda. One Turner executive said his old boss avoids showing his face at Atlanta’s CNN center.

However, even before the AOL merger, Turner was spending less and less time on Time Warner affairs. In 1997, with Time Warner’s stock soaring, Turner pledged $1 billion over 10 years to the United Nations--at the time the largest single contribution by an individual. Turner said it symbolized a shift in his passions and priorities from big business to humanitarian causes.

He has earmarked other money for reducing nuclear arms. In an effort to save ranchland and open spaces, Turner has become the nation’s largest individual landowner, with nearly 2 million acres.

This year, he set up a production company devoted to documentaries and movies exploring Turner’s passions for world history, nuclear disarmament and the environment.