Media giant Time Warner today said it would take a $3 billion charge against earnings to resolve the shareholder lawsuits related to its ill-fated acquisition of America Online.
The New York-based company, which released its quarterly financial results today, also said it authorized the purchase of up to $5 billion of its stock during the next two years.
The $3 billion charge reflects the creation of a reserve fund to cover resolution of AOL litigation, including $2.4 billion to settle the major shareholder lawsuit against the company. The remaining $600 million will be used to cover other litigation related to Time Warner’s 2000 acquisition of the online company.
“Reaching an agreement in principle to settle this securities litigation and reserving for it and all other related matters mark important steps toward putting these matters behind us,” Time Warner Chairman Dick Parsons said in a statement. “By working to resolve these issues now, we’re aiming to avoid the costs, risks and distractions of protracted litigation.”