Curtain May Fall on AOL-AT&T; Venture

AOL Time Warner Inc.’s new management team could unwind the beleaguered media giant’s complex entertainment venture with AT&T; Corp. as early as this week, in the process taking a big step toward building its high-speed Internet strategy.

Sources familiar with the situation said the most probable resolution calls for AOL Time Warner to offer up to $2 billion in cash, some AOL stock and about a 20% stake in a publicly traded cable TV business for the stake in Time Warner Entertainment, held by AT&T; and Comcast Corp., which agreed this year to purchase AT&T;’s cable operations.

Such a deal would give AOL Time Warner full control of HBO and Warner Bros. Studios and access to offer AOL high-speed Internet service on AT&T; and Comcast cable systems, the nation’s largest, sources added.

AOL Time Warner then could sell some small assets to alleviate its debt load, said industry insiders, who also look for the company to replace more managers at its AOL unit now that a new chief has been named for that business.

AOL Time Warner has seen its stock price drop 70% this year amid slower growth, federal probes of its America Online division and an unclear strategy of how to add high-speed Internet customers.

AOL Time Warner closed at $11.05 on Friday on the New York Stock Exchange.