Time Warner to Pay Investors $2.65B

Time Warner will pay $2.65 billion to end a shareholder lawsuit after a U.S. District Judge approved a proposed settlement. The company initially agreed to the settlement last August, admitting it had inflated AOL's revenue in order to have the merger approved.

Judge Shirley Wohl Kram approved the payout on Thursday, calling it "fair, reasonable and adequate." Nearly 600,000 Time Warner shareholders have signed on to the class action lawsuit.

A group of shareholders sued the company shortly after it paid $210 million in fines to the Securities and Exchange Commission over similar charges. While that suit alleged AOL inflated revenues in late 2000 and early 2001, the shareholder suit covered a much broader period, from January 1999 to August 2002.

The merger has been nothing short of a nightmare for Time Warner; including this settlement, over $3.5 billion has been paid to resolve issues of shady accounting resulting from the AOL deal. Additionally, some $200 billion in stock value has been lost since 2002.

The resulting fallout has resulted in shareholders attempting to overthrow the current board of directories, and urging Time Warner executives to sell the America Online unit -- recently rebranded as AOL, LLC. Outspoken billionaire investor Carl Icahn has headed these calls.

However, Time Warner remains committed to turning around AOL. Last September, CEO Richard Parsons told financial analysts that the driver for the company "is going to be AOL in the short term and the long term."