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June 23, 2000: 12:31 a.m. ET
Amid cheers and jeers, AOL, Time Warner shareholders OK $118B buyout
By Staff Writers Tom Johnson and Franklin Paul
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NEW YORK (CNNfn) - Shareholders of Time Warner Inc. and America Online Inc. voted Friday to endorse AOL's proposed $118 billion purchase of Time Warner -- a deal that would create a media conglomerate with a hand in everything from Web access to e-commerce to magazines and movies.
 The votes of both companies' shareholders overwhelmingly favored the stock and debt deal, which is now valued at about $118 billion - based on AOL's closing stock price Friday -- down from $164 billion when its was announced in January.
Though the results were largely expected, the meetings gave shareholders a rare chance to directly praise, or raise protests to top executives.
Shareholders of Time Warner, the parent of CNNfn.com, voted by a 99-percent margin in favor of the pact at a meeting in New York. About 97 percent of the shares voted by America Online stockholders, meeting separately in Dulles, Va., supported the deal.
Now regulators in the United States and Europe will study the merger plan. The companies must persuade officials that the combination of AOL, a dominant Internet access provider, and Time Warner, owner of a vast collection of print, entertainment and cable television assets, will benefit everyone and not restrict access to competitors -- a tall order, though analysts don't expect the government to stop the merger.
Some AOL voters jeer; Time Warner holders cheer
Although AOL shareholders approved the deal, serious concerns were expressed about what impact the merger was having on their sagging stock price, which is down more than 20 percent since the merger was announced. Anointed a so-called "blue chip technology stock" during a period when an influx of investors' dollars sent Internet stock prices soaring, AOL shares had risen some 400 percent in the 16 months before the deal.
 More than 500 shareholders packed into a crowded Vienna, Va. conference room just down the road from AOL's headquarters. One shareholder stood up during the meeting and, before apologizing for repeating the question raised by several others, said, "I think 99 percent of the people here are here because of the share price."
One particularly aggressive participant also told AOL President Bob Pittman to seek another job because he would never run the combined company, but was booed by the otherwise civil crowd.
AOL's chairman and chief executive, Steve Case, 41, who originally predicted that the stock would rebound a couple of weeks after the merger was announced, spent almost an hour alleviating investor qualms. Case blamed the slump on market forces that have driven technology shares down across the board and said he remained confident the stock would gain momentum again as the merger's closing date in the fall drew closer.
"As we get closer to the merger date, as people get more confident in our combined company, I think we'll see some momentum in the stock," he said.
"We're not saying that we're satisfied with the stock going down, but in the five months since we've announced the merger, we have outperformed everyone in the sector."
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Time Warner chairman and CEO, Gerald Levin, spoke with CNNfn earlier today.
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Somewhat conversely, Time Warner shareholders in New York twice showered Time Warner CEO Gerald Levin with praise and applause, thanking him for steering the company into the digital age.
"I and everyone here owe you a debt of gratitude for the fabulous job that you and your board of directors have done," said one speaker, who identified himself as the "oldest shareholder in the room."
"We owe you a round of applause," he said. The audience obliged.
Levin, 60 -- visibly at ease and bolstered by a stock that has risen 26 percent since the deal was revealed -- spoke with pride of the company's legacy, and said the combined company would "give new meaning to the American Dream."
 "I believe that we can grow faster and provide superior returns than we could have separately," he said, in response to a shareholder's question about he stock price. "I think AOL-Time Warner is a very good idea."
Not everyone turned cartwheels at the meeting. Sasson Nabi, a shareholder for about 11 years, said he abstained with his vote because he felt that neither company had adequately explained how they would merge their vast and very different cultures and assets.
Still, he will hold his shares, in part because of his respect for Levin.
"Overall I like the honesty of Levin," Nabi said. "He's a straight and sincere guy."
Absent from the gathering was the billionaire cable TV maverick, Ted Turner, who is Time Warner's vice chairman and largest individual shareholder. Levin, who reiterated that Turner would play a key strategic role in the new company, speculated that Turner was en route to his ranch in Montana after a busy week of meetings on the East Coast.
In Virginia, AOL's Case said Turner would have "a much stronger voice" than most large investors because he "is one of the great entrepreneurs of our time."
CEOs expect regulatory approval
Case told the overflow crowd he was confident of regulatory approval and of the deal closing in the fall. Some analysts believe the deal may not close until the fourth quarter of this year, rather than the third quarter as initially expected.
Late Friday, federal regulators demanded more information from AOL, including data about its new interactive television service AOL-TV, agreements with Hughes Electronics Corp. and delivery of AOL service over direct subscriber line, satellite and wireless services, Reuters said.
Specifically, federal regulators asked whether customers using AOL-TV will be able to surf the Internet, what agreements AOL has with cable operators, and what services AOL currently provides and plans to offer via AOL-TV, which was unveiled just this week.
In addition, regulators asked Time Warner to produce all documents related to talks, plans or proposals for the future of high-speed Web access venture Road Runner.
Analysts have said regulators might seek to ensure that the combined company's distribution channels remain open to other content providers.
Levin said that would not be a problem.
Before the meeting, Karen Thompson, an individual AOL investor from
Manassas, Va., told CNNfn.com that she was undecided on how she would vote because she was worried that the combined entity might draw too much concern from monopoly busters.
"The first thought that went into my mind [after hearing about the merger] was should it be approved, will we be going down the same road as Microsoft by creating another monopoly?" she said.
 Case said the company was "pleased with how the review of our merger is proceeding," and downplayed concerns that the European Union, also wary over Time Warner's proposed acquisition of music label EMI, might move to block the deal.
"I would expect that in the fall they will be supportive of the merger," he said. "So this is more of a logistical issue right now.
"This is the largest merger in U.S. history ... and for that reason it's going to get a lot of attention. However, it's different in character than any other merger you'll see. We're not expecting our market share to grow in any segment and we're not dominating in any segment."
Case added that the merger would create a company prepared to face a "new world," in which interactivity is a part of everyday life. (424K WAV) or (424K AIF)
"We've declared openly that this is not about any exclusive arrangement with respect to content," Levin said. "That is, the sale of Time Warner content will be made to many platforms, and AOL as a service will be supplied by many different players." (365K WAV) or (365K AIF)
Time Warner (TWX: Research, Estimates) stock closed down 4-1/16 to 77-9/16 on Friday. AOL (AOL: Research, Estimates) stock tumbled 3-1/8 to end at 53-3/18. 
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