Aol

Rebuffing aggressive overtures from Microsoft, Time Warner has agreed to sell a 5 percent stake in America Online to Google for $1 billion in cash as part of an expanded partnership between AOL, once the dominant company on the Internet, and Google, the current online king. At stake in this battle is leadership in Internet advertising, a growing threat to other media companies. The loss is a blow to Microsoft Corp., which had sought AOL as a partner in its advertising venture to undercut Google Inc., its potent rival.

Welcome Back, Kotter and Wonder Woman. Perfect Strangers and Pinky and the Brain. Sure, the TV series themselves are a little dated, but they'll air in a revolutionary way this winter when America Online offers them on the Internet, on demand and for free. For media companies, AOL's new service, In2TV, pioneers a fresh source of advertising revenue from about 100 classic programs, some of which have been shelved for years. For couch potatoes, the new service is not just an opportunity to relive the glory days of Maverick and Eight Is Enough.

Time Warner Inc. announced yesterday that it would make more than 100 old television series - including Falcon Crest, Kung Fu and Welcome Back, Kotter, the 1970s sitcom that made John Travolta a star - available free in the first major archive of TV shows on the Web. When it starts in January, the joint venture between Warner Bros. Domestic Cable Distribution and America Online could help TV, Internet and advertising executives gauge the appetite for longer entertainment programs on the Web, which is dominated by shorter bits typically lasting no more than a few minutes.

America Online co-founder Stephen M. Case, who orchestrated his company's often-ridiculed takeover of Time Warner Inc., resigned from the media giant's board yesterday - just as the era of digital entertainment he envisioned is taking shape. Case's departure comes as AOL's stature within Time Warner has grown. Once a weight around the company's neck, AOL now is seen as crucial to delivering Time Warner's vast array of content and competitors such as Microsoft Corp. and Google Inc. are vying to buy a minority share.

The question nagged Harvey Levin all summer: Is the Internet a place where TV careers go to die -- or be reborn? After Telepictures Productions pulled the plug on Levin's syndicated newsmagazine Celebrity Justice, he was approached about starting an entertainment news Web site with America Online. "My initial reaction was, I couldn't be less interested," Levin recalled. "I thought, I'm going to do more television. Why would I do Internet?" But he continued to ponder the benefits of online distribution: younger viewers, faster turnaround, lower overhead, not to mention exposure to the more than 110 million people who visit AOL Web sites each month.

"Three years ago my brother died (officially missing, presumed dead - no death certificate)," wrote an anonymous contributor last week at gripe2ed .com, a consumer complaint Web log. "At that time I was able to cancel his credit card, gas, insurance - everything except his AOL account." It seems that America Online Inc., not entirely irrationally, needed a screen name and other account information to cancel the subscription - something this consumer, under the circumstances, did not have handy.

For exasperated customers who have tried to cancel a service to no avail, an explanation may be at hand. A settlement reached yesterday with America Online established that some sales representatives receive bonuses to keep consumers from leaving. AOL agreed to pay $1.25 million in penalties and to refund some customers' subscription fees after New York Attorney General Eliot Spitzer accused the country's largest Internet service of making it unduly difficult for customers to drop the service.

America Online Inc., which centered a humorous advertising campaign on its efforts to protect people from Internet intrusions, found itself answering yesterday for a Baltimore subsidiary that was accused of installing spyware on people's computers -- under the guise that it was providing spyware protection. AOL wasn't named or included in a settlement announced yesterday between the Federal Trade Commission and Advertising.com, which AOL acquired last year for $435 million. The incidents took place in 2003.

NEW YORK - Time Warner Inc. said yesterday that it would pay $2.4 billion to settle a shareholder lawsuit over alleged improper accounting stemming from its merger with America Online Inc. The world's largest media company is placing the money in reserve, along with another $600 million to cover related settlements. The announcement came as Time Warner reported a loss for the second quarter because of the tentative settlement. "By acting now to put these matters behind us, we avoid the costs and distractions of protracted litigation, an outcome we clearly believe serves the best interest of our shareholders," Chief Executive Officer Richard D. Parsons said during a conference call.

Q. I'm a fairly aggressive investor and own a few media stocks, including Time Warner Inc. What is the outlook for the company? - R.A., via the Internet A. There's always plenty going on at this media and entertainment giant, though not all of it has benefited shareholders. While Million Dollar Baby hasn't been the box-office smash that Lord of the Rings: The Return of the King was a year ago, the boxing film directed by Clint Eastwood did take home four major awards on Oscar night. The Aviator, another of the company's films, also was a big winner.