Showdown at Time Warner

Problems with AOL accounting leave Dick Parsons in a tight spot: Settling with the SEC could fuel an investor lawsuit

It was late 2003, and Richard D. Parsons, chairman and chief executive of Time Warner (TWX ), had been at loggerheads with the Securities & Exchange Commission for more than 18 months. The issue: whether the company properly booked a slew of advertising deals negotiated by America Online before it merged with Time Warner. Parsons had already reduced AOL's reported ad revenues by $190 million over eight quarters. But he drew the line at SEC demands that he restate even more by marking down an unusual $400 million advertising contract AOL had struck with German media giant Bertelsmann in 2001.

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