F Time Warner. F AOL. F them all.

I see that the $2.4 billion settlement of the stupidest merger in history is for only those who were stupid enough to buy the stock between 1999 and 2002, not the poor shmucks (like me) who owned the stock and didn’t sell it because the jackasses lied about the value of AOHell.

A law firm representing the lead plaintiff group announced separately that the settlement with their group, which amounts to $2.4 billion, will benefit shareholders who bought shares of AOL or Time Warner between Jan. 27, 1999, and Aug. 27, 2002. The accounting firm Ernst & Young has also agreed to pay $100 million.

The settlement deal must still be approved in court. The company also set aside another $600 million to settle other remaining shareholder litigation.

I’m pissed. Can you tell? That damned Time Warner stock was my FU money and it F’ed me.

: LATER: Locaste tells me that it’s the Supreme Court I’m pissed at. OK, why not, everybody else is.

  • penny

    Speaking of dumb mergers, Chrysler and Mercedes was as dumb. Talk about two cultures that shouldn’t/couldn’t mesh. I think they are now divorcing.

    As I’ve grown older and wiser, if it makes no sense, bail out on the stock in spite of the hype.

    Like you, Jeff, I’ve worn that t-shirt. Never again.

  • John

    Any guesses, Jeff, as to what your share of the settlement check to Time-Warner stockholders is going to come to out of that $2.4 billion, after all the legal fees are taken care of? If history’s a lesson, I’d guess somewhere between the cost of one round-trip PATH fare to Hoboken and a Starbucks Venti Frappuchino…

  • http://buzzmachine.com Jeff Jarvis

    Well, John, if the latter, that’s a damned fortune, eh? Or it’s worth more than AOL is!

  • Dan

    Sorry to hear it Jeff.

    Then again, for someone who gets it as well as you do, I’m surprised that you didn’t short it all the way down. Because it’s so risky (and becuase I don’t actively watch my investments), I almost never go short. But this one was too obvious…

  • http://www.sotirov.com/2005/03/steal-2-million-rot-in-jail-you-low.htm Emil Sotirov

    There is something magical about the “$2.something bln” number… It is recurring again and again in all the big settlements lately. As if there is some kind of secret “glass” ceiling agreed upon between the big corporate thieves and the lawyers’ class.

    I have a posting on my blog titled “Steal $2 Million – Rot in Jail You Low Life! Steal $2 Billion – Settle and Prosper.”… which I wrote in March this year. Since then, the number $2 bln happened a few more times. It must be the new corporate “golden” standard for paying your way out of jail. But it’s good this way… corporate thieves can now plan around this number. Next time, they’ll just have to “price in” the $2 bln.

  • http://www.livejournal.com/users/iocaste iocaste

    The reason the settlement only covers purchasers, and not people who held on to the stock, is that the Supreme Court has held that the securities laws don’t allow lawsuits for holders. Blue Chip Stamps v. Manor Drug Stores.

  • Larry

    This stock has been in the tank since 1989 when Time management fought off a $200+ per share offer from Paramount to merge with Warner. The company has been saddled with debt since that time and shareholders have never come close to getting that value from their investment.

  • http://www.allyourtv.com Rick Ellis

    When this merger happened, I was working at a now shuttered online financial news organization.

    I thought the merger was idiotic at the time, the numbers just didn’t add up, and any merger that is between two such obviously different business models (and argues that they can cut costs through “consolidation of sales and marketing”), is due to be a disaster. Plus, even then it was apparent that AOL’s narrowband business could do nothing but shrink in the future.

    But there was also a problem on the Time Warner side. At that point, they just didn’t “get” the Internet (anyone remember “Entertaindom?”), and combining that flaw with AOL’s “the web is the answer to everything” was not a recipe for success.

    But to be fair, the merger also got hit by the tech crach of the late 1990′s. If the stock hadn’t slumped so severely (along with many other tech stocks), everyone involved might have worked a bit harder at making the best of things.

  • HT

    Jeff, I’d cheerfully give you my share of the settlement (yes, I was stupid enough to qualify), except that the paperwork they make you complete is extremely onerous and the amount you receive at the end of the day is miniscule, so it’s not worth the effort.

    These deals are all for the benefit of lawyers and institutional investors, who have enough skin in the game to make it worth their while. Even on the institutional side (specifically, mutual funds), while the dollars may be significant in absolute terms, by the time they are filtered down to the actual share price they provide no benefit to the actual fund holders. All they can really do is bolster a quarter’s results and get some manager a bigger bonus.

    So the lawyers and fund managers are really the only beneficiaries in a situation like this. Swell, huh?

    Tort reform, anyone?

  • http://www.onehandedeconomist.com Timothy

    Jeff: I hope this has taught you a valuable lesson in portfolio diversification. Once you have the FU money, why not cash in the earnings and convert to bonds? Bonds are for maintenance, stocks are for growth.

  • http://dossy.org/ Dossy Shiobara

    What’s the real crying shame here is that the people who are paying for the transgressions committed are the shareholders of today, not the management of yesterday.

    So, who exactly is benefitting from this $2.4 billion settlement, again?

  • http://www.creativevoices.us Jon Rintels

    Hope you won’t buy into that media “synergy” bullshit again.