Former AOL boss Steve Case practically fled to his Hawaiian pineapple farm after the AOL-Time Warner merger he engineered in 2000 vaporized much of the company's combined market value. Now that Liberty Media Corp. Chairman John Malone is open to swapping his 2.8% stake in Time Warner Inc. for AOL's dial-up business, the extent of Mr. Case's heroics on behalf of AOL shareholders has become clearer. The AOL-Time Warner deal created a $350 billion media giant. Eight years later the value of the company, including its spun-off cable arm, is a quarter of that. Much of this can be chalked up to the dot-com crash. Although AOL had only a third of the revenue of Time Warner at the time of the deal, it had twice the market capitalization. AOL's value then was powered largely by its dial-up business, which provided Internet access over telephone lines. When the deal was hatched, this segment accounted for 70% of AOL's business -- and investors expected it to continue its rapid growth. That didn't happen. Today, AOL has 8.7 million dial-up subscribers, and that number is dwindling. Mr. Malone says he might be willing to take it off Time Warner's hands in exchange for his stake in the media concern, which is now valued at $1.6 billion. One could argue that, had Mr. Case not engineered the merger with Time Warner, this amount is about what AOL could be valued at today as an independent company. Instead, AOL shareholders were handed 55% of Time Warner as part of the merger. Based on the current market prices of Time Warner and Time Warner Cable, that is roughly $46 billion -- or nearly 29 times Mr. Malone's present valuation of the once-core AOL business. AOL-Time Warner may be remembered for the buckets of shareholder money it destroyed. But by using AOL's expensive stock to snatch a majority stake in Time Warner, Mr. Case may have pulled off the greatest heist in modern financial history

— Steve Case on shareholder value in AOL deal  

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