Miller confirmed as new head of AOL

ITworld.com –

In a widely anticipated move, AOL Time Warner Inc. (AOLTW) named Jonathan Miller as the new Chairman and Chief Executive Officer (CEO) of its tottering America Online Inc. (AOL) Internet division Tuesday.

Miller will be responsible for all of AOL's businesses, and will report to Don Logan, head of the company's new Media and Communications Group, AOLTW said.

Miller, 45, hails from USA Interactive Inc., where he served as president and chief executive officer (CEO) of USA Information and Services (USAIS) until he resigned in June.

USAIS is the interactive unit of what has been known as USA Networks, the e-commerce and entertainment company run by media mogul Barry Diller. Diller recently sold USA's film and television units to focus on the company's Internet business, prompting Miller to strike off on his own given that his role at USA was superfluous.

Miller will be taking over from AOLTW Chief Operating Officer-elect Bob Pittman, who was acting as interim head of AOL since last April, when the unit's former CEO Barry Schuler stepped down.

Pittman announced that he was leaving the company last month, however, creating a vacancy atop the struggling Internet unit.

The new CEO is expected to face a mountain of challenges as he takes over a division that has been passed around lately like a hot potato. Not only has AOL's growth been stymied by a prolonged downturn in the Internet advertising market, the unit has recently come under scrutiny for alleged financial misdoings. Both the U.S. Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) are investigating accusations that AOLTW inappropriately booked revenue to AOL in an effort to artificially boost the unit's performance.

What's more, AOLTW has been undergoing a restructuring process in the last few months that has pushed the balance of power toward the Time Warner side of the company. Analysts have predicted that the recent ascension of former Time Warner executives will place the company's focus on more traditional media such as film and cable, with AOL pushed to the sidelines.

However, with AOL's over 34 million subscribers, hefty brand name and elevated role as Internet advertising platform for all of AOLTW's other media holdings, the unit is unlikely to be thrown out with the bath water.

Miller's first goal should be getting back to basics, said Paul Kim, an analyst with New York-based Kaufman Brothers LP.

"First, he needs to get AOL focused," said Kim. "AOL has always been about ease of functionality and good marketing."

Kim added that AOLTW's previous aim to leverage its various media holdings against one another only served to weaken the Internet unit.

"AOL's user base isn't too sophisticated," he said. "There is no use wasting energy on synergies and cross-platforms ... that's really a joke."

Miller brings with him a wide breadth of Internet and e-commerce experience, however, and is generally seen as a positive addition to the company's old media guard.

"It's nice to see a change of tone for the AOL business," Kim said. "It was an arrogant organization."

With AOLTW's stock price slumping over 60 percent so far this year, mostly due to AOL's less-than-stellar performance, the company has fallen on more humble times, however. When Richard Parsons took the over as the company's new CEO last May, he made a plea for investor faith, promising to resurrect AOL as well as investor confidence in the company.

All eyes will no doubt be on AOLTW in future months to see if fresh blood is breathing new life into the media giant.

Stock in the company (AOL) fell 3.32 percent in afternoon trading Tuesday to US$9.62 following the news.

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