NEW YORK – Steve Case was still in the chairman's seat after the conclusion of AOL Time Warner Inc.'s (AOL) board meeting on Thursday despite widespread speculation he would be challenged by investors and board members, including Vice Chairman Ted Turner.
"Just as we repeatedly said, Steve Case is the company's chairman and will remain so," an AOL Time Warner spokeswoman said after the meeting was over. "Steve Case and (Chief Executive) Dick Parsons conducted regular board business at today's meeting."
The meeting in New York did not result in a boardroom coup. Instead, executives from the world's largest media company updated the 14-person board on a variety of issues at hand, including efforts to turn around its embattled Internet unit America Online, sources familiar with the situation said.
The board did not take a vote regarding Case's chairmanship and discussions about his role were also not part of the agenda, a source close to the situation said.
Several industry sources had said Case would have enough support to stay on the board but added that the America Online co-founder and last remaining key architect of the $106.2 billion takeover of Time Warner would likely leave soon.
"There is no support within the company and not even at AOL (for Case), but there is also no compelling reason to get rid of him right now," said a source familiar with the situation. "There are a lot of people counseling Steve to move on but he would prefer to wait until everything calms down. Even if he quits voluntarily right now, it looks like he was pushed out."
Other industry insiders said he probably would not want to exit while the company's America Online unit is still under investigation by the U.S. Securities and Exchange Commission and Justice Department about its accounting practices.
Investors such as Turner, the company's largest investor, has lost billions of dollars as AOL's stock has fallen 70 percent since the merger was completed in January.
Turner and other board members with Time Warner roots have led the charge for Case's departure.
The last board meeting culminated in the resignation of Chief Operating Officer Robert Pittman -- another architect of the deal whose premise is now questioned -- only months after he was sent to revive America Online.
AOL Turnaround Plan Discussed
Thursday's meeting was the first board gathering since AOL Time Warner said it may have improperly accounted for revenue from three advertising deals and started an internal review of the deals after the government began probes.
It was also the first opportunity for the recently reshuffled top executives, including HBO's Jeff Bewkes and Time Inc.'s Don Logan, to meet with the board and brief them on the changes new America Online head Jon Miller has implemented.
"They are discussing turnaround plans for AOL, but I don't think there are any final decisions yet. I think it's more about what they have found out from their internal reviews and if they have uncovered any more problems," a source familiar with the situation said.
Speculation about Case's departure has overtaken news about developments of the federal probes into America Online but investors hope to get a clearer idea later this fall. The company had said it hoped to have its own internal review into the deals completed by the end of the third quarter.
"It looks like they may have an (AOL) analyst day in November so they are setting it (the turnaround plan) up for the board now and will announce it to the investment community later," Kaufman Bros. analyst Paul Kim said.
Miller has said broadband and new programming will be major priorities as he tries to reinvigorate America Online.
Investors have grown frustrated at the company's failure to offer up a clear strategy for how it will approach high-speed services. While recent changes and comments have offered them some comfort, they are eager for more details.
"I would love to see some resolution from the board that they are going to focus on broadband and concentrate their efforts," said Porter Bibb of Technology Partners. "The company is selling broadband services under different names -- Road Runner and AOL -- under different pricing structures. They are competing with each other and it seems like it's a bit crazy."
Several investors and analysts said they hoped the board was concerned more with addressing the business challenges at hand than symbolic moves, such as possibly removing Case.
"Frankly, for the remainder of the year, what is on my mind is, are they able to sign additional cable deals, how bad online advertising gets and what impact it has on the numbers and do we see any improvements in the ad picture," FAC/Equities analyst Youssef Squali said.
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