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The Honolulu Advertiser
Posted on: Saturday, May 31, 2003

Microsoft payment to reduce AOL debt

Bloomberg News Service

AOL Time Warner Inc., the world's largest media company, will use $750 million from a legal settlement with Microsoft Corp. to reduce debt, chief executive Richard Parsons said yesterday.

Microsoft said on Thursday that it had agreed to settle an antitrust lawsuit by New York-based AOL Time Warner. The lawsuit accused Microsoft of illegally dominating the market for Internet browser software and shutting out AOL Time Warner's Netscape Navigator program.

The settlement was "less than I think AOL could have gotten if they could have held out longer," said George Gilbert, who helps manage about $340 million in technology stocks, including shares in AOL Time Warner and in Microsoft, at the Northern Trust Bank in Chicago. "Settling this for a little bit less is going to move the company in the direction of bringing the debt load down."

Parsons has said he will reduce AOL Time Warner's debt, $26.3 billion in March, to $20 billion by the end of next year. The company netted $1.23 billion recently by selling its stake in the Comedy Central cable-television network and is seeking buyers for its book-publishing unit and the CD-manufacturing arm of its music business, people close to the situation have said.

"We're going to use the settlement proceeds just to retire some debt," Parsons said yesterday in a conference call discussing the Microsoft settlement.