|AOL Time Warner COO Robert Pittman quit today.
In a stunning -- though expected -- reversal, Mr. Pittman will immediately relinquish two of his key roles, as chief operating officer of AOL Time Warner and as director of the company. Mr. Pittman, who is also the interim CEO of the troubled AOL unit, will depart the company entirely once a transition to a new chief executive is completed.
The moves come at a time when the company's stock has lost 70% of its value since last year's merger, and when the company itself has become exhibit A for those arguing the age of the mega media merger is over. In a memo to staffers, AOL Time Warner CEO Richard Parsons addressed these concerns, saying, "I realize these changes follow a period of tough going for our Company, in which our initial expectations ran head-on into the dot-com bust, the ad recession, and a general decline in investor confidence."
Shares of AOL Time Warner
The company is also shaking up its top management structure. Don Logan, formerly the chairman-CEO of Time Inc., will become chairman of the newly created Media and Communications Group, with oversight of America Online, Time Inc., Time Warner Cable and the AOL Time Warner Book Group and video unit. Jeff Bewkes, former chairman-CEO of HBO, was named chairman of another new unit, Entertainment and Networks Group, which oversees the remainder of the company's cable properties, movie studios Warner Bros. and New Line Cinema, the WB network and Warner Music.
Shift to Time Warner
The moves significantly weighs the top echelon of company management with those from Time Warner units.
"My initial reaction is they're essentially going back to Time Warner pre-merger," said Mandana Hormozi, senior vice president of investment firm Lazard Freres, New York, and thus abandoning the company's stated emphasis on cross-platform synergies. Ms. Hormozi said both Mr. Logan and Mr. Bewkes favored a more decentralized approach than Mr. Pittman.
"[Mr.] Pittman's been made a scapegoat to some extent," Ms. Hormozi added, "maybe not completely unfairly, because he was responsible for a lot of targets they put in place."
The company took a beating from the stock market and analysts when aggressive revenue targets it set in the wake of the merger proved unattainable -- even after the company stuck by them long after company executives openly questioned them.
Mr. Logan and Mr. Bewkes will report to Mr. Parsons. In their previous positions, they reported to Mr. Pittman.
Mr. Logan will be replaced by Ann Moore, formerly executive vice president of Time Inc. who oversaw its wildly successful People Group, which includes In Style and Teen People, and its Parenting Group. The move may give some traditional-minded Time Inc.-ers pause -- but even the widely beloved Mr. Logan hailed from the homey Southern Progress Corp., not from the company's journalistic blue-chip news brands like Time or Fortune.
Mr. Bewkes will be replaced at HBO by Chris Albrecht, who as president of HBO's programming unit, oversaw quintessential cable success stories such as Sex and the City and The Sopranos.
'Deserves to take a break'
Company executives were not immediately available for comment. In a prepared statement Mr. Parsons all but handed Mr. Pittman the proverbial gold watch, saying Mr. Pittman "deserves to take a break, and has a very bright future at whatever point he decides to get back into the fray." In a memo to staffers, Mr. Parsons said that "Bob wants -- and deserves -- to take a breather and enjoy time with his family."
"Last quarter they said he was the man to turn AOL around," Ms. Hormozi marveled. "The speed with which it happened is surprising."
The AOL unit itself could use a breather. In the past several months, several of its key executives have been reassigned to sometimes-nebulous roles within the company. Chairman-CEO Barry Schuler stepped down in April to head up a digital-technology unit. Later that month, Robert Friedman, president of worldwide interactive marketing, was named to a senior vice president post at the parent company.
Also in April, longtime AOL executive Myer Berlow, who had a key role in the company's cross-platform ad sales strategy as president of its Global Marketing Solutions unit, dropped that title for a consultancy. Mr Berlow described himself today as "semi-retired."
AOL was also the subject of a lengthy piece in The Washington Post today that questioned some of its accounting practices.
Mr. Parsons responded to the article in his memo. "There are no 'accounting issues' at our company," he said, but added that "given who we are and what we do, we must embody a higher standard."
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Tobi Elkin contributed to this report.