Time Warner Inc. announced this week that it will settle a class action brought against it by shareholders who lost money after the media giant merged with America Online (AOL).
The shareholders had accused the firms of fraudulently inflating AOL's advertising revenue and internet subscriber figures.
According to reports, Time Warner has set aside $3 billion in reserves related to litigation. However, the settlement amount agreed upon in the class action dispute is $2.4 billion, with auditor Ernst & Young also paying out $100 million to compensate shareholders.
This follows the payment of $300 million by the media conglomerate to settle a civil case with the Securities and Exchange Commission, and of $210 million to settle a Justice Department investigation.
In a statement released this week, Time Warner CEO, Richard Parsons announced that:
"Reaching an agreement in principle to settle this securities legislation and reserving for it and all other related matters mark important steps toward putting these matters behind us."
"By working to resolve these issues now, we're aiming to avoid the costs, risks and distractions of protracted litigation. Even after we're considering the reserve, our balance sheet remains strong."
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