AOL Time Warner


was under pressure Friday morning after John Malone's

Liberty Media

(L) - Get Report

said it would put some of its 171 million AOL shares behind a new convertible bond issue.

Liberty will sell $1.5 billion of debentures that are convertible into AOL shares in an effort to raise money for acquisitions. Liberty's AOL stake was worth about $1.96 billion before the announcement.

Fearing dilution, investors sold AOL Friday, sending it down 48 cents, or 4%, to $10.98 on Instinet. Liberty was trading down about 10 cents at $9.66.

Separately, reports said CNN founder Ted Turner told AOL's board he doesn't intend to step down anytime soon. Turner is the company's largest individual shareholder and reportedly has been frustrated with the company's direction. He was portrayed in some reports as the guiding hand behind the ouster of Steve Case from the company's AOL division.