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AOL may pay $1B to settle
Lawyers estimate the media giant may ink second-biggest settlement of shareholder suits on record.
May 1, 2003: 11:10 AM EDT

NEW YORK (CNN/Money) - AOL Time Warner Inc. may have to pay as much as $1 billion to settle shareholder suits alleging that its America Online unit inflated ad revenue, a news report said Wednesday.

The Wall Street Journal reported in its online edition that while the world's largest media company is making progress in reducing its $26 billion debt load, the cost of resolving shareholder lawsuits and government investigations is hanging over the New York-based company.

The report, quoting lawyers experienced in such lawsuits, said that based on the damages investors are likely to seek and previous suits, a payout of $1 billion was a good estimate.

That would be the second-biggest settlement of a shareholder suit, after Cendant Corp.'s record $2.8 billion payout in 1999, the report said, adding that AOL could easily make such a payment, especially since it has insurance.

Samuel Heins, the head lawyer for the lead plaintiff in the class-action suit, the Minnesota State Board of Investment, declined to speculate "on the extent of either damages or settlement," according to the report.

An AOL spokesman declined to comment beyond the company's statement in SEC filings that it will defend the lawsuits vigorously, the Journal said. AOL also has said it couldn't "reasonably estimate a range of possible loss."

The report said that aside from the large amount of damages likely to be sought, other factors indicate an AOL settlement would be bigger rather than smaller. But it added that settlements of even more than $100 million are the exception rather than the rule.

AOL Time Warner (AOL: Research, Estimates) stock ended unchanged at $13.68 Wednesday. CNN/Money is owned by AOL Time Warner.  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.