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The media giant reaches settlements with the SEC and the Justice Department.
Stephen Taub, CFO.com | US
December 16, 2004
Time Warner agreed on Wednesday to pay more than $500 million to settle charges with the Securities and Exchange Commission and the Department of Justice.
In its pact with the Justice Department, the media giant agreed to pay a fine of $210 million to settle charges that its America Online unit fraudulently inflated its revenue, according to Reuters.
In a separate settlement of civil charges brought by the SEC, the company is expected to pay about $300 million related to its purchase of a stake in AOL Europe held by Germany's Bertelsmann AG, the wire service added.
AOL also accepted responsibility for conduct of its employees that led to the criminal violations and agreed to cooperate fully with the Justice Department in its investigation of those individuals, according to Reuters. In return, the department agreed to hold off prosecution of the company for 24 months, after which time it will dismiss charges if AOL has followed the terms of the deal, Reuters added.
Last month, Time Warner reserved about $500 million to cover anticipated costs associated with these settlements, according to The Wall Street Journal. The paper noted that as is typical in such settlements, Time Warner will neither admit nor deny wrongdoing.
By putting the settlements behind it, added the Journal, the company will have an easier time making acquisitions. In fact, it is rumored that Time Warner and Comcast are interested in bidding for some of Adelphia's assets.