Will Lead New Digital Services Division

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NEW YORK ( -- AOL Time Warner today said Barry Schuler, chairman-CEO of its America Online unit, will step down and will develop new digital services for AOL.

Robert Pittman, chief operating officer-elect of AOL Time Warner, assumes Mr. Schuler's responsibilities at AOL. There is no time frame being placed on the search for Mr. Schuler's replacement.

Mr. Schuler became chief executive at AOL in January 2001 after the merger of America Online and Time Warner. Prior to AOL, he was the co-founder of Medior, a software company that redesigned AOL's interface several years ago. It was acquired in May 1995 by AOL for about $30.9 million in stock.

Increasing scrutiny
The move comes

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as AOL has been under increasing scrutiny amid slowing growth in its cash-cow dial-up Internet business. AOL is struggling to convert consumers to its high-speed broadband Internet service and to launch premium pay services.

Discussions about a shift in responsibilties took place over several weeks among CEO-elect Richard Parsons, Mr. Pittman and Mr. Schuler.

Mr. Schuler will lead a new division at AOL called the Digital Services Development Group, which is charged with developing new interactive products across all of AOL Time Warner's properties. The position has no title as yet, but the group will consist of product and technology personnel across the company, said John Buckley, a spokesman for the media giant.

Mr. Schuler was tapped to lead the new division because "he is uniquely qualified to direct our development programs for home networking solutions, digital home services such as digital music delivery and other critical interactive products," Mr. Parsons said in a statement.

'Product innovator'
Regarding Mr. Schuler's new role, "Barry is and has been a product innovator. ... If you were looking for the best person to develop innovative technologies that consumers are going to want, you'd choose Barry to do it," Mr. Buckley said.

Insiders say Mr. Schuler grew tired of the day-to-day management of AOL and was itching to get closer to strategic development of new projects.

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