AOL Time Warner on target, Case says

Bloomberg News Service

MADRID, Spain — AOL Time Warner Inc. rose from the $124 billion merger of a 16-year-old Internet company with one of Hollywood's oldest studios, a publishing and music empire, and the No. 2 cable-TV operator.

Steve Case, the Honolulu-born chairman of AOL Time Warner Inc., now the world's largest media and Internet company, was in Madrid recently taking part in a meeting of the Global Business Dialogue on Electronic Commerce.

The following are excerpts from an interview Case gave on the company's strategy and outlook.

• On possible acquisitions of cable companies:

"Our focus right now is on bringing these companies together. The merger is going exceedingly well. The financial results (announced earlier this month) demonstrated this company was firing on all cylinders. We do believe that there are opportunities that over time we should pursue, including opportunities outside the U.S."

"We think that global expansion is going to be a key area over the next decade and we will do that through continuous internal growth and expanding a lot of our brands, as well as some investments over time, probably some acquisitions."

• On AOL's strategy in Europe:

"I think AOL's business is going quite well. We don't try to export AOL to Europe; we try to create localized versions. And that's working: We are the leading pan-European server, and we've got considerable momentum."

"We do have some issues in certain countries — for example, in Germany where we are really encouraging Deutsche Telecom to move to a flat rate access because the lack of it is limiting the growth of Internet in Germany."

"We don't see acquisitions as being critical to fuel our Internet business; it is more likely we look at these over time, or at some kind of joint ventures or investments as a way to expand the more traditional Time Warner businesses."

• On their cable businesses:

"We'll provide different options. AOL itself has had a service called AOL Plus for some time, which is a broad-band service with high-speed access. That will continue.

"Then there is Road Runner, which will be marketed as a separate brand. And one of the things we will be doing with Time Warner cable systems is called multiple ISPs, or open access offer. We'll let consumers choose."

• On the prospects for results:

"The outlook is very bright. We have said we think AOL Time Warner will generate $40 billion of revenue this calendar year and $11 billion (in earnings before interest, taxes, depreciation and amortization) and we are on target.... PC sales may soften in some sectors, but we are still seeing robust interest in the Internet around the world ... because the vast majority of people are still not connected, and that creates an unusual opportunity for AOL."