September 12, 2002, 2:23 PM — America Online Inc. (AOL) announced a restructuring of its management team under new Chairman and Chief Executive Officer (CEO) Jon Miller Thursday, giving Miller stronger control, while eliminating the offices of AOL president and chief operating officer (COO) and dismantling a troublesome business affairs unit.
The restructuring comes less than six weeks after Miller was appointed to the flailing Internet unit of media conglomerate AOL Time Warner Inc. (AOLTW), in an effort to shore up performance of the unit and do away with trouble spots that have kept the company in recent headlines.
The new structure will allow AOL to focus on new content and features, a "differentiated broadband" service and profitability in international units, AOL said.
Under the changes, Miller is set to take a direct role in overseeing the AOL brand, interactive marketing and broadband initiatives, the Dulles, Virginia, unit said.
The offices of AOL president and COO are being eliminated, and current AOL Executive Vice President and Chief Financial Officer Joseph A. Ripp will take a leading role as new AOL vice chairman. Ripp will oversee corporate and operating functions, including AOL's network and technologies.
Current AOL President Ray Oglethorpe is set to retire after a transition period in which he will serve as a company advisor, AOL said.
Meanwhile, current COO J. Michael Kelly is moving to AOL International as its new chairman and CEO.
In other changes, AOL said that it is reassigning employees of the company's business affairs unit to the specific groups they serve. The business affairs unit has been the subject of scrutiny lately amid accusations that it forged a number of unusual deals in order to artificially enhance the performance of AOL's advertising business. These accusations, first reported in an investigative series by the Washington Post, sparked dual probes into the company's financial reporting, by both the U.S. Securities and Exchange Commission and the U.S. Department of Justice.
AOLTW itself admitted last month that it had discovered three deals in which it may have inappropriately booked some US$49 million.
A prolonged weakness in the online advertising market has taken its toll on the Internet unit in recent quarters, along with sluggish subscriber growth. The company's new organization under Miller seeks to right the unit, focusing on broadband opportunities and refreshing its blotched image.
In a statement, Don Logan, chairman of AOLTW's Media and Communications Group, said that restructuring will make AOL's operating units more "nimble"and "accountable."
Stock in AOLTW (AOL) slid 2.72 percent to $12.89 following the announcements.