Even AOL Has Dreams, Studio Talks Show

AOL Time Warner (AOL Quote) is dreaming a little dream of DreamWorks. And, contrary to Wall Street rumblings provoked by tough economic times, AOL says it isn't just scraping by.

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Speaking at the Salomon Smith Barney/Broadcasting and Cable Magazine Big Picture Conference on Tuesday, AOL Time Warner CEO Jerry Levin acknowledged that AOL Time Warner could be the new home of the boutique Hollywood studio. "We are talking," he said.

Levin's statement follows reports earlier this year that DreamWorks, now closely allied with Vivendi Universal (V Quote), is in the process of negotiating a distribution deal with AOL Time Warner, which would also take an investment in the company founded by Jeffrey Katzenberg, Steven Spielberg and David Geffen.

If AOL were to complete the deal, it would stand in contrast to the usual news flow coming out of the company since the first of the year, primarily focused on making staff cuts and divesting assets such as World Championship Wrestling. Levin's comment comes one day after AOL Time Warner said it was an investor in MusicNet, an online music service, along with EMI Group, Bertelsmann and RealNetworks (RNWK Quote).

Among other benefits of such a deal, suggested Levin, was the ministudio's film library. DreamWorks has produced such films as Gladiator, American Beauty and Chicken Run.

Getting Comfortable

Though some on Wall Street doubt that AOL Time Warner will be able to meet its oft-repeated goal of reaping $11 billion in earnings before interest, taxes, depreciation and amortization in 2001, Levin and CEO Steve Case insisted once again the company will meet the target.

In fact, Case said that to make that number, the company wouldn't even have to raise the America Online service's $21.95 monthly subscription fee -- a price hike that Wall Street denizens such as Merrill Lynch analyst Henry Blodget have said they expect the company to do on the road to $11 billion. Case didn't rule out raising the fee, but insisted that the motivation would be the value that AOL has added to the service in the three years since it last hiked fees.

Attempting to dispel any suspicion that he might now or in the future be in a power struggle with Chairman Steve Case, Levin said he wouldn't overstay his welcome at the company. "You will not have to carry me out of AOL Time Warner," he said, though he declined to give a specific retirement date.

Elsewhere, in a discussion led by longtime interviewer David Frost, Case discussed a childhood venture in which he sold lemonade, and Levin affirmed Frost's disclosure that the CEO had played on his college's cricket team. "Yes, anticipating this interview," Case told Frost.