AOL Discussing Unspecified Partnership With AT&T;

NEW YORK — America Online Inc., which is buying media giant Time Warner Inc. for $141 billion, is discussing a partnership with AT&T; Corp., the largest U.S. long-distance phone company, said America Online Chairman Steve Case.

“We’re having discussions with AT&T.; There’s a variety of things we could do together,” Case said. He declined to comment on a time frame and wouldn’t say what type of alliances they are discussing. “It’s reasonable to expect partnerships in the not-too-distant future and with a variety of partners.”

America Online agreed to buy Time Warner in January to gain access to its content, which includes magazines such as Time and television networks such as CNN, as well as its high-speed cable Internet lines. The combined company has pledged to open cable lines to rival Internet service providers. Other companies with cable Internet networks such as AT&T; will follow suit, and AOL is negotiating with cable companies to gain access to their lines, Case said.

“Just as Apple learned when they controlled things too tightly with the Mac in the 1980s, they missed a broader opportunity,” Case said. “Other cable companies want to get on the bandwagon, and so do other” Internet service providers.

America Online will continue to offer content from many media sources and won’t tie itself to using only Time Warner content, he said. AOL has signed distribution deals with media companies, rather than creating its own content.

“HBO is the leading movie channel, but it wouldn’t be if it only carried Time Warner movies,” Case said. “We’ll do what makes sense for us and consumers.”

The Dulles, Va.-based company’s stock has fallen 24% since saying it would buy Time Warner on Jan. 10. AOL stock will rise as investors understand how the two companies will help each other, Case said.

Combining the companies will allow America Online to increase revenue by selling more through new devices such as AOL TV and Internet-connected cell phones, Case said. For example, consumers will be able to order music through America Online’s services. AOL TV will make Time Warner’s content interactive by, for example, allowing people to watch whatever segment of CNN they want.

America Online is talking to Bertelsmann, a Time Warner media rival with which AOL operates Australian and European joint ventures, about “how to work together in the future,” Case said. There’s been speculation that Bertelsmann might leave the joint ventures now that AOL is buying Time Warner.

“We’re confident we’ll have a good relationship with them,” he said. The relationship “is likely to be different than in the past, but it’s too premature to comment on that.”

Time Warner is seeking to end its exclusive Road Runner contract before its termination at the end of 2001 so that it can open up the cable network earlier, Case said. Road Runner is a joint venture of Time Warner, MediaOne Group, Compaq Computer Corp., Microsoft Corp. and the Newhouse family’s closely held Advance Publications Inc.

“The worst case is it’s 2001, and the best case is a lot sooner,” Case said. He declined to comment on what will happen to Road Runner after America Online completes its purchase of Time Warner.

The company isn’t expecting any government roadblocks in getting the acquisition completed, he said.