NEW AOL CHIEF READIES REORGANIZATION PLANS

Dulles, Va., Business Unit to Be Dispersed

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NEW YORK (AdAge.com) -- Jon Miller, the new CEO of AOL Time Warner's America Online, this week is expected to disclose his plans for the reorganization of the troubled interactive unit, according to executives familiar with the matter.

As for the precise timing of

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the announcement, "We've got nothing to say, we will make an announcement on the reorganization of AOL when we're ready," said John Buckley, AOL spokesman.

Dismantling Dulles unit
The overhaul is expected to disperse employees in AOL's business affairs unit throughout the company, leaving only a handful of personnel at its Dulles, Va., headquarters.

The unit, comprised of more than 80 people, has been under scrutiny since The Washington Post reported last month of controversial ad and e-commerce deals. The unit traditionally played a role in various parts of big cross-media advertising deals. The reorganization is expected to streamline the processes involved in negotiating ad deals and clarify the role of business affairs in augmenting them.

AOL Time Warner insiders said members of the unit may report to AOL's Interactive Marketing ad sales chief Bob Sherman. The company declined to comment.

Earnings estimates drop
AOL Time Warner today revised its estimates for AOL downward. AOL's 2002 advertising and commerce revenue is approaching $1.7 billion but AOL Time Warner warned that it could come in 5% lower. Ebitda, or earnings before interest, taxes, depreciation and amortization, is expected to approach $1.7 billion to $1.8 billion. In July, the company said Ebitda for the AOL unit would range from $1.8 billion to $2.2 billion.

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