Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Magazine

Table: The Pressure To Settle Is Growing


A two-year-old SEC probe into Time Warner's AOL unit has turned into a standoff, with stark legal risks for the company no matter what it does.

WHAT HAPPENED

In 2001, Time Warner agreed to pay $6.75 billion for media giant Bertelsmann's stake in joint venture AOL Europe. At the same time, Bertelsmann bought $400 million in ads, primarily on AOL.

AT ISSUE

The SEC contends the ad deal was an offset against the price of the AOL Europe stake and that booking the $400 million as ad revenue inflated AOL's profits. Time Warner says independent experts agree with its treatment of the two deals as separate.

IF TIME WARNER FIGHTS

The SEC is likely to bring securities fraud charges this summer. A trial would provide a road map for shareholders suing Time Warner over charges that it hid AOL's true financial condition.

IF TIME WARNER SETTLES

The company probably won't be forced to admit wrongdoing, but the SEC charges will boost the shareholder suit. The SEC penalties could be stiff because the agency views Time Warner as uncooperative.


LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus