AOL Time Warner chief quits

Internet tycoon Steve Case has been forced to stand down as head of the giant media group AOL Time Warner.

He will quit as chairman in May after a shareholders' revolt following a 70 per cent drop in the value of the company.

His resignation comes nearly three years after one of the biggest mergers in corporate history, when his internet access division AOL staged a £70billion takeover of Time Warner to create what was then the world's second biggest media group.

Despite predictions that the merger would dominate the entertainment industry, shares in the company fell steadily. Among those said to be pushing for Case's resignation was media mogul Ted Turner, the founder of the 24-hour TV news network CNN, which became part of the group.

Regarded as one of the visionaries of the digital age, 44-year-old Case began work at Pizza Hut but then built AOL into the world's largest internet access company.

In a statement, he said he would "love" to have remained as chairman but that he had become a "distraction". He said he now "believes stepping down is in the best interest of the company''.

Major shareholders had asked Case to resign several times in recent months. Pressure increased after claims that AOL had artificially inflated its earnings both before and after the merger.

Both the Securities and Exchange Commission and the United States Justice Department are still investigating the allegations, although Case is not said to be a direct target.

As well as CNN, the company includes Time and People magazines, the Warner Brothers film studio and HBO, the cable company behind acclaimed series such as The Sopranos and Sex And The City.

It was originally planned that each division would promote the other - a much-hailed concept known as "synergy".

In reality, the merged company was badly hit by the crash of internet and other new technology stocks and a worldwide slump in advertising.

AOL has also stagnated in recent months and now faces a powerful challenge from Bill Gates's rival MSN service.