Steve Case, Chairman of AOL Time Warner
This is a partial transcript from Your World with Neil Cavuto, January 13, 2003, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.
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NEIL CAVUTO, HOST: We could spend some time theorizing what others think he will do, we decided to talk to him about what he will do. We're talking about Steve Case.
Steve, good to see you.
STEVE CASE, CHAIRMAN, AOL TIME WARNER (AOL): Good to be here.
CAVUTO: Why you doing this?
CASE: Because it's the right thing for company. Given the environment we are in, and given the current state of things, I just thought when I really reflected deeply over the holidays that it would be the right thing for the company. There is a lot of swirl, as you know, probably helped stir some of the up in the fall with speculation about, was Steve Case going to stay as chairman? that kind of thing. And it kind of died down but it was, I thought, reasonably possible that it would pick back up as we headed towards the May annual meeting. I just said, you know, this company has some real serious business challenges, let the company focus on those challenges, and not have this debate about my role. So that really led to the decision to step aside now.
CAVUTO: Do you think whoever succeeds you should have a co-role, chairman and CEO? or should there be distinction, chairman and CEO?
CASE: Well, I told the board over the weekend, as I think one of the benefits of me giving them four months notice is they have time to reflect on that. And in these times where people are taking corporate governance very seriously, I think we can use the time to really consider the different options, and, I think there are pluses and minuses to every option. But I decided it really should be up to the full board, not something that I dictated or even recommended a particular option.
CAVUTO: Would you be for Richard Parsons assuming the chairman title as well?
CASE: I'd be for whatever the board supports.
CAVUTO: OK. And now if the board still had stood by you, it was going to be an uphill fight for them to try to remove you even though there were a few vocal directors who wanted to do just that, did you read the writing on wall and say I'm going to quit before I'm dumped?
CASE: No. I know some might want to speculate about that. But the fact of the matter is even in the past year only one director ever came to me and suggested I should resign and only one institutional investor ever came to me and suggested I should resign. So I had a board of directors with 14 people on it, given that it takes 75 percent of the vote to remove me, I thought it was pretty likely that if I stood my ground and was tenacious, that I wouldn't in fact be chairman a year or two, three from now. But it shouldn't be about Steve Case, it should be about what's best for company and the 90,000 employees of the company and the millions of families who are investors in the company. And I decided there was just too much focus on me and my role and.
CAVUTO: Yeah, but those investors, Steve, got burned, look at that chart. They got really burned. They are very angry.
CASE: I understand they are very angry. I understand that there is the architect of the merger than the chairman of the company. It is not unreasonable that that anger would be directed at me personally. And that's obviously why I made the decision to step down.
CAVUTO: Of course, now there are all these investigations about whether there were any financial improprieties, whether revenues and/or earnings were booked maybe nefariously. What can you say to that?
CASE: Well, first of all, my decision had nothing to do with the investigations. Second, I really think it's up to Dick Parsons who is the CEO of the company to talk about what are the ongoing operations of the company. But third, I'll say that when I was CEO of AOL, and when I was chairman of AOL Time Warner, I did everything I could to live up to my responsibilities. I'm proud of the decisions I made. So I think over time, as the facts come out, hopefully people have a clearer view of what happened.
CAVUTO: How were relations in end with you and Ted Turner?
CASE: Actually it can be ups and downs, but recently it improved somewhat, even a month or so ago he said, you know, maybe this will work out OK, and maybe he was pleased with the fact that I was reacting to some of the criticism the way I had. So that had lessened a little bit.
CAVUTO: If they bring him back, would you be for that?
CASE: I'm for whatever the board will support.
CAVUTO: If board said, Ted Turner as chairman, you would be for that?
CASE: I will support whatever the full board supports.
CAVUTO: Because he didn't flip over you in the end.
CASE: I'm sorry?
CAVUTO: He didn't flip over you in the end
CASE: I'm not sure what "flip over" means.
CASE: Actually, I think he likes me a lot at a personal level, but I think he, too, was angry about what had happened to the stock price of the company. And he, too, like many others, really was emotional about it and focused some of that anger at me personally. I understand that.
CAVUTO: You know what a lot of people are bitter about, see that you made $160 million, while everyone else was getting deluged and hit. People are bitter and angry about that. Steve Case, give us back that 160 million.
CASE: Well, I understand that. But what some people forget to point out is I still have 30 million shares in options, and I too have lost a lot of money in terms of what's happened to that stock. In fact, since we closed the merger my holdings in the company have increased, not decreased. So I'm a believer in this company. And.
CAVUTO: But you have made a lot more money off your stock investments than anyone else has, on paper.
CASE: Well I'm not sure that is true, there may be other people.
CAVUTO: Haven't been too many people who walked out with $160 million in one fell swoop.
CASE: Well, I'm not saying I didn't diversify some of my holdings and sell some stock, but I also bought some stock. And so I think if you look at it in aggregate, you would find that my holdings in the company increased since the time of the merger. But again, this is the whole reason I decided to step down. This shouldn't be a debate about Steve Case. It shouldn't be a debate about the past. It should be how does AOL Time Warner move forward into the future and how do I remove my role as a distraction and a source of frustration in.
CAVUTO: Is your heart not in it, Steve? I know you were very close to your brother Dan, when he passed away of a brain tumor, that sort of sucked the life out of you, I heard a lot of people say.
CASE: Not at all. It was obviously a disappointment, but that really had nothing to do with this decision. In fact, as I look back over the history of the company, it's a short history, because the merger was only announced three years ago, I really do feel at every juncture I did what I thought at the time was best for the company. Initially, putting the deal together, which I thought was are good AOL and I also thought was good for Time Warner given what will happen over the coming nears years with technology. Then once the shareholders approved the merger, we announced the team, I thought the best thing was to pull back and not have a day-to-day role, because at the time of the merger, as you may recall, there was a lot of swirl about who was going to be in charge, and are there are too many people in the executive suite? And then about a year ago I thought it was important, since things were a little off-track, to reengage. And I have been much more active in the past year. This time I thought it was time to pull back, and indeed, to step down as chairman of the company.
CAVUTO: But as an ample shareholder, what do you make of these rumors that AOL Time Warner is effectively on the block now? Do you buy that?
CASE: I would disagree with that. I think we have a board that recognizes it has responsibilities to its shareholders and is committed to maximizing shareholder value, and is talking about a variety of strategies to make sure we are on the right track. And I think over time, it is not going to happen overnight, these things tend to take some time, but over time.
CAVUTO: But what if a GE came in and made a bid, would you advise board this not good idea, let's stay independent?
CASE: I'm not going to speculate on any kind of hypothetical possibility. I will say that I and, I think, the whole board would focus on maximizing shareholder value.
CAVUTO: What about a breakup of the company, essentially back to what it was, AOL one side, Time Warner and all its assets on the other?
CASE: Again, I think the focus should be the prism through which we all should look at this. What is best way to maximize shareholder value over the long run?
CAVUTO: But wouldn't that be a put-down on your vision?
CASE: Well, circumstances change, the environment sometimes change. I would suggest, though that to the extent people are waiting with baited breath for something like that, it may not happen or at least may not happen as quickly as they might think. Right now our focus is on getting things on track. We recognize the first couple years since the merger things have not gone the way we liked them, and we are disappointed about that.
CAVUTO: Do you think you were just ahead of the curve or this was a silly idea to begin with?
CASE: I think it was a solid idea strategically, for both companies, I think the environment in the past couple years has been difficult, the economy overall, the advertising market has been in recession, the Internet industry kind of went into an implosion, and that obviously created a difficult operating environment. At the same time we had some difficulties getting thing on track, in terms of bringing the companies together, but now under the leadership of Dick Parsons I think we are now on track.
CAVUTO: What about that bringing in a John Malone from TCI to sort of take a chairman role?
CASE: Again, I will support whatever the full board supports. I'm not going to speculate on any particular possibilities.
CAVUTO: OK. Walter Isaacson, out as head of CNN today, too. Coincidental?
CASE: It is coincidental, and disappointing because I think Walter is terrific. I understand he will be making an announcement shortly. I'm not sure he has made it yet. So I'm not going into any more detail. I think it's.
CAVUTO: Are there other heads to roll there?
CASE: I'll let Walter talk about it.
CAVUTO: Or is there just more to see?
CASE: Well, we have 90,000 employees. And different people will make different decisions. In this case it was Walter's decision to do something different, as I understand it. But I will let Walter talk about his future. It is not my job.
CAVUTO: What about you?
CASE: I'll continue to be chairman through May and then I'll continue to be very active in trying to make sure I can do everything I can possibly do to get the company on track. This will be my number one priority.
CAVUTO: Hey, only 44 years old, you've got your life ahead of you. I can't see you just sort of sitting on a porch, looking at the sunset. What are you going to do?
CASE: Well, that doesn't sound so bad to me. But I'll figure things out after May. Between now and May I'm committed to making sure there is a smooth transition. We keep things on track after May, I will be an outside director and involved in the strategy committee. So I will spend as much time as is necessary to be helpful. But obviously come May I'll have some more time on hands. And I'll, at that time, think about what I should be doing.
CAVUTO: Steve Case, good seeing you again, we wish you well.
CASE: Thank you.
CAVUTO: Steve Case, the chairman of AOL Time Warner.
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