Time Warner agrees to settlements

WASHINGTON (AP) -- Time Warner Inc. moved Wednesday to resolve two federal investigations into its America Online unit, agreeing to pay $210 million to settle criminal securities fraud charges and disclosing it would pay $300 million to end an accounting probe.
The settlements will free the media giant to move forward on proposed acquisitions in 2005 -- possibly including Adelphia Communications Corp. -- and raise money for other deals by issuing new shares of stock. That had been prevented by the Securities and Exchange Commission while the investigations continued.
"It starts to free the company to get on with business," said Tom Wolzien, media analyst for Sanford C. Bernstein & amp; Co. "It's been a huge distraction for management."
The $210 million agreement with the Justice Department, filed in federal court in Alexandria, Va., defers for two years prosecution of AOL or Time Warner on charges of aiding and abetting securities fraud stemming from a partnership deal with now-defunct Purchasepro.com. If the company cooperates in possible prosecutions of individual AOL executives and adheres to other parts of the deal, the charges would be dismissed.
"If AOL fails to comply with the agreement, the deal is off, and they are in a world of trouble," said Deputy Attorney General James Comey, head of President Bush's corporate fraud task force.
An independent monitor will be chosen to oversee AOL's compliance with the settlement, and the company must agree to a number of changes in its internal practices.
AOL entered into a partnership with Purchasepro in 2000. When revenues from the deal failed to materialize, "instead of confronting that harsh reality, AOL and PurchasePro cooked up a scheme to inflate Purchasepro's revenues," Comey said.