Commentary: AOL Time Warner chairman Steve Case has never been known for understatement. That's why he was only half-joking that AOL Time Warner could be a company with $100bn in revenue and a $1tn market capitalisation. The $1tn market cap is what Case reckons would make AOL Time Warner the world's most valuable company. Maybe Case was smoking too much synergy Wednesday at the company's first investor day. Maybe he's just delusional to think a media company could be worth $1tn (you could combine every media company in the world and not get to $1tn). At least, Case had enough sense to not set a deadline. As for the $100bn in revenue target, AOL could be well on its way by the end of the decade. Officials reiterated projections that the company will post revenue of $40bn and earnings before interest, taxes, depreciation and amortisation of $11bn in 2001 despite a soft first quarter. "AOL Time Warner has unparalleled consumer relationships and multiple ways to monetise them," said AOL Time Warner's Bob Pittman, co-chief operating officer. Pittman also indicated that AOL Time Warner wants more than just the media pie -- it plans to garner a big chunk of total consumer spending. So how will AOL Time Warner become that $1tn company? We came up with a few scenarios: Likely

• Go on a spending spree: AOL Time Warner said it would have $50 billion in available resources to acquire companies over the next three years. Some of that money will be invested in new technologies, but most of it will go to acquisitions. Give AOL Time Warner a year to produce those proposed synergies and the media giant could go shopping.
• Expand internationally: AOL Time Warner's Internet service is almost an afterthought abroad. At an informal dinner the other night, analysts said Case was frank about AOL's international struggles. As a result, AOL Time Warner only gets 20 percent of its sales overseas. Case reckons that could get to 33 percent in five years. Here's a tip to fix AOL's struggles abroad -- create an international brand without the AOL initials. Do you really think folks in France, Germany and the UK are dying to use an online service called America Online?
• Increase prices: Case said the AOL Internet service is worth more than $21.95 a month. He also indicated that the psychological barrier to raising rates a few bucks is low. I agree. Meanwhile, cable rates are double what AOL charges. Merrill Lynch estimates that a $2 rate hike on AOL would result in an extra $500m in revenue.
• Experiment heavily: Play with new pricing models to introduce new products and put a new spin on old ones. Officials already told analysts about plans for subscription music and ways to leverage MovieFone. Some of these music plans, however, will take two to three years to hit the market.

Less likely

• Buy AT&T Broadband: Once Ma Bell finishes its massive break-up plan, AT&T Broadband, the cable unit, will be independent. AOL Time Warner's second biggest jewel behind AOL is its cable network. An acquisition of a major cable operator would lock up the market.
• Buy ISPs: This option is feasible only if subscriber growth slows for AOL -- and it hasn't yet. Why bother with broadband deals with EarthLink? Just buy 'em.
• Merge with Bertelsmann: It would get AOL out of that pesky international expansion problem mentioned above. But such a combination could be an integration disaster.

Slightly ahead of our time

• Buy Canada: The country's vast resources could surely be leveraged through AOL Time Warner's assets. AOL Time Warner's motto could be: We're more than a media company, we're a country!
• Merge with Microsoft: AOL obviously had a thing for maturing industries -- it bought Time Warner. Let's take it another step. AOL could buy Microsoft, which is obviously a maturing business. Just for kicks put Microsoft and former Netscape employees in the same office.
• Take NBC off General Electric's hands: In a stock swap, GE could unload NBC to AOL Time Warner. AOL Time Warner has the WB Network and Buffy the Vampire Slayer, but it's no NBC. GE would also become AOL Time Warner's largest shareholder. Once the deal is done, Case, Pittman and chief executive Gerald Levin can really plug the stock on CNBC, a financial news channel people actually watch.

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