Time Warner settles on lawsuit over share price losses

Time Warner has settled a lawsuit filed by shareholders over the media giant’s merger with America Online in 2001. After the merger, which cost Time Warner $124 billion, stock values plummeted on stalled growth, prompting the litigation which claimed that AOL had inflated sales figures in order to close the deal.

The settlement will cost Time Warner $2.4 billion dollars, pushing the company to its first losing quarter in nearly three years. The company’s report shows that it lost $321 million in the second quarter as sales dropped 1.1 percent to $10.7 billion on lower film revenues and lost AOL customers.

AOL lost 917,000 customers in the US in the quarter, and film revenues could not match last year’s income from “Lord of the Rings” and “Harry Potter”.

In the same quarter last year, Time Warner’s profit was $777 million. Besides announcing the end of litigation, Time Warner also said on Wednesday that it will mount a $5 billion share buyback. The combined announcements saw share values drop 15 cents to $17.27.