Case Leaves Time Warner

America Online co-founder Steve Case, who orchestrated his company’s often-ridiculed acquisition of Time Warner Inc., resigned from the media giant’s board Monday -- just as the era of digital entertainment he envisioned is taking shape.

Case’s departure comes as AOL’s stature within Time Warner has grown. Once a weight around the company’s neck, AOL is now seen as crucial to delivering Time Warner’s vast array of content, and rivals such as Microsoft Corp. and Google Inc. are vying to buy a minority share.

“I have been pleased to see a renewed focus on AOL at Time Warner, and the emergence of so many strategic alternatives,” said Case, who stepped down as chairman in 2003 but remains one of Time Warner’s biggest individual shareholders.

He said he was resigning to devote more time to Revolution, the company he launched in April to finance healthcare and lifestyle businesses. “Leaving Time Warner’s board,” he said, “will give me a greater opportunity to grow Revolution, including avoiding any potential conflicts of interest as Revolution moves into new areas.”

Analysts were split in their interpretation of Case’s departure.

“Our guess is, it means the board of Time Warner has decided definitively to sell a piece of AOL, and that has upset Steve Case,” said Laura Martin, senior media analyst with Soleil-Media Metrics. “I don’t think people resign from boards because everyone thinks things are fine. He wouldn’t just leave suddenly on a Monday morning.”

Shares of Time Warner were up 8 cents at $17.83.

Under pressure to boost its stock price, Time Warner is negotiating with Microsoft and with Google for a stake in AOL. A person close to Time Warner suggested that AOL’s negotiations played a “secondary” role in Case’s decision to step down.

“He believes the advice he would give would be refracted through the prism of other board members saying, ‘But you have a history here,’ ” the source said.

Mark Stahlman, technology strategist for Caris & Co., said he takes Case at his word.

People of Case’s stature often stay at a company until they feel it’s finally pointed in the right direction, the analyst said. And renewed interest in AOL’s “audience” business -- the home page and other free services supported by advertising -- shows that AOL is regaining its stature as a major Web player.

“What Time Warner is doing, instead of selling his baby, is finally putting AOL in a position where it can succeed,” said Stahlman, who helped take AOL public in 1992 as an investment banker with Alex. Brown & Sons.

Whatever the reason, Case’s departure ends his career with Time Warner. In 1985 he helped launch the company that would soon become AOL and oversaw its rise to the world’s largest Internet service provider, with a peak of 26.7 million U.S. subscribers in September 2002.

In 2000, with AOL’s stock heavily inflated by the dot-com bubble, Case and then Time Warner Chief Executive Gerald Levin pushed through the $99-billion union of the companies, proclaiming the deal the convergence of old and new media.

The deal proved disastrous, slashing the company’s value and leading to the ouster of most of the deal’s chief proponents. Case was one of the last to remain. As of Jan. 31, according to a Securities and Exchange Commission filing, Case owned 16.2 million Time Warner shares, worth more than $289 million at Monday’s closing price, plus options to buy 17.2 million shares.

Time Warner Chairman Richard Parsons, in a statement, thanked Case for his efforts.

“We have great respect for his long record of achievement -- as a co-founder of AOL to a valuable member of our board,” Parsons said. “As Steve is one of our major individual shareholders, we’ll look forward to his wise counsel as the company continues to move forward.”