Bennett will give up CEO role at Prodigy
Prodigy President-CEO Ed Bennett will step down this week in a management reorganization led by the struggling online service's new owner.
Greg Carr, co-chairman of International Wireless, which acquired Prodigy last month, becomes chairman of the online service company and the largest shareholder with a more than 20% stake. International Wireless President-CEO Paul DeLacey becomes CEO of Prodigy.
Mr. Bennett will leave behind day-to-day management responsibility to function in a role he described as a "visionary."
'A FORWARD-LOOKING THINKER'
"I want to be a forward-looking thinker," Mr. Bennett told Advertising Age. "I want to be in the position to say the company has been bought, has been capitalized and has been stabilized." His new title is expected to be announced this week, along with the other management changes.
Though the deal between International Wireless and Prodigy had been described widely in the business press as a management buyout aided by International Wireless, Mr. Bennett now says this is not the case.
"I basically delivered the company to Prodigy investors. They bought Prodigy," he said.
International Wireless, a closely held telecommunications company, has changed its name to Prodigy Inc. as part of the reorganization.
"When we first bought the company I intentionally let the plans remain vague," Mr. Carr said. "The thing people may not realize . . . is that Paul DeLacey and I came in to change the company and run it. We have faith in it."
Since joining Prodigy last year, Mr. Bennett has installed a team of executives that share his vision. Culled from companies like NBC, Viacom and McKinsey & Co., it's unclear what role those executives will have in the new Prodigy.
"If they lose Ed, they risk the whole place caving in," said Gene DeRose, president of online consultancy Jupiter Communications. "Ed has a solid and fairly loyal top staff built in his image."
BUDGETING ISSUES SWIRL
Rumors of turmoil between Prodigy and its owner have swirled in recent weeks. One executive familiar with the companies said a key sticking point has been the budget assigment for content development, an area where Mr. Bennett has strong ambitions. While Mr. Bennett originally requested $100 million for content development, an insider said his budget was reduced to less than $10 million.
"I suspect that Prodigy is not getting the long leash that they'd hoped for," said Emily Green, director of Forrester Research.
Messrs. Carr and Bennett declined to give specifics on marketing and content development budgets; Mr. Carr said interactive ad revenue goals and pricing for the new Prodigy Internet service, launching this fall, have not been finalized.
AGENCY SEARCH AHEAD
Another undecided factor in the company's agenda: a new agency. Prodigy and Cliff Freeman & Partners, New York, ended their year-old relationship earlier this month.
The company will select a new agency by mid-August for a print and direct marketing campaign, a Prodigy spokesman said. The account is estimated at $10 million.
COMPUSERVE SHUFFLES STAFF
In another corner of the online world, CompuServe also is shuffling staff. The company this week launches a new version of its flagship service, renamed CSI.
As part of a brand management and integration strategy, CompuServe is migrating key managers hired in 1995 for the launch of family-geared WOW! into the flagship service. WOW! will move to corporate headquarters in Columbus, Ohio, from offices in Dublin, Ohio.
Scott Kauffman, VP-general manager of WOW!, was named VP-online services, overseeing both CSI and WOW!. Also, Sam Uretsky was promoted to VP-sales and marketing for CompuServe, from director of product development at WOW.! And Tim Nix, formerly creative director at WOW!, was named editor in chief of all CompuServe content.
"As we began looking at the emerging business model . . . it became clear that the two organizations had to come together," said Mr. Kauffman. CSI has 3.4 million subscribers; WOW! currently has 91,000.
"WOW! hasn't been an exploding success, but it hasn't been a failure," Forrester's Ms. Green said. "I think CompuServe has recognized it has some talent it could make better use of."
Impacts on advertising and marketing of the two services are also expected. While both CSI and WOW! will continue to run separate advertising, CompuServe will re-evaluate its relationships with DDB Needham Worldwide, Chicago, agency for CSI, and Martin Agency, Richmond, Va., which handles WOW!.
"That's one more place where we can get economies of scale," Mr. Kauffman said.
CompuServe will spend $150 million to market the two services this fiscal year, ending April 30.
Copyright July 1996 Crain Communications Inc.