New AOL broom sweeps clean
Published: 12 Sep 2002 15:12 BST
AOL Time Warner on Thursday announced sweeping organisational changes at its America Online unit, in a bid to make that division more profitable and tighten its focus on broadband services.
An overhaul has been expected for some time. Recently, former USA Networks executive Jonathan Miller was named chief executive of the division, in a move that presaged the restructuring.
Speculation was further fuelled after a speech that AOL Time Warner chief executive Richard Parsons gave in the United Kingdom this week. According to news reports, Parsons said that "if (AOL) is going to live, and I think it is, it will be somewhat like HBO," the company's cable-television division. He added that AOL would need to schedule programming that people were willing to pay for.
Miller will now oversee the AOL brand, interactive marketing and AOL broadband, "with the goal of setting clearer priorities, increasing accountability and clarifying organisational roles," the company said in a release on Thursday.
Two executives are stepping away from full-time roles at the company: president Ray Oglethorpe will retire after advising the company during a "transition period," and Jan Brandt, chief marketing officer and vice chairman, will become a part-time adviser to the company.
The positions of president and chief operating officer are being eliminated. Chief operating officer J. Michael Kelly has been named chief executive of AOL International, reporting to Miller. Kelly will also oversee the AOL Anywhere products and services.
Also, chief financial officer Joseph Ripp has been named vice chairman, overseeing corporate and operating functions, including network infrastructure and technology operations. The company is conducting a search for a new chief financial officer.
The online giant has had its share of troubles. The soft advertising market, for instance, is taking its toll. The company recently said it expects 2002 revenue from advertising and e-commerce at the unit to be around $1.7bn, although sales could come in about 5 percent lower. And accounting processes in its business affairs unit have drawn questions from investigators at the Securities and Exchange Commission and the Department of Justice.
AOL said on Thursday that the business affairs division, which was responsible for making deals that included advertising pacts, would be disbanded, with employees reassigned to the business units they support.
In a release, Miller set a list of objectives for the newly restructured unit, saying that "AOL must maintain its leadership position among dial-up subscribers, enhance our broadband business and reinvigorate our relationship with marketers."
The company has created new "councils" that will work on brand, product and technology strategy. A senior strategy group consisting of Miller, Ripp, Kelly, AOL Interactive Services president James de Castro and AOL Time Warner Media and communications chairman Don Logan, has been formed to set corporate goals and strategies.
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