Vice Chairman Leonsis to scale back involvement in AOL

Ted Leonsis, a high-ranking AOL executive, will step back from his day-to-day management role to focus on outside interests.

Ted Leonsis, one of AOL's top leaders in the past 13 years, will shed his day-to-day management duties in January, but will remain vice chairman of the Web portal and Internet services provider.

Leonsis is seen as having a steady hand in keeping AOL afloat during rough times and for envisioning and implementing dramatic strategic changes. By retaining his vice chairman role, he will continue to be "a strategist and visionary for AOL" and a mentor to executives, AOL said in a statement Friday.

He steps away from active management at a critical time for AOL, as the Time Warner subsidiary continues to morph into an advertising-driven Web portal and moves away from its subscription-based Internet access model.

This shift, in the works for years, began in earnest in mid-2005 and got its biggest public boost last month when AOL announced it would provide for free practically all of its content and services.

Viewed as a bold jump without a net, this decision will accelerate the shrinking of AOL's Internet access business, whose subscription rolls have been deflating for several years. It remains to be seen if the advertising revenue will grow enough to justify the gamble.

As president of AOL's Audience business, Leonsis oversees AOL's advertising operations, whose success is mandatory for the company to survive and thrive. He will relinquish this role effective 1 January 2007.

Already, AOL announced its intention to slash up to 5,000 jobs worldwide, or just over a quarter of its workforce, anticipating the shrinkage of its access business.

As if the dramatic business-model shift wasn't enough of a challenge, AOL executives have had to wipe a lot of pie from their faces in recent months due to a series of disconcerting bungles.

The most serious one was the public release last month of about 20 million search records from about 658,000 of its members. A storm of criticism hit AOL over this faux pas, which the company acknowledged was a lapse in judgment.

Although AOL didn't disclose member names, it grouped each person's records with a unique number, making it possible to see what each individual searched for. The data included search queries, as well as Web sites the members clicked on.

In June and July, the company faced a public relations nightmare after a member called AOL to cancel his subscription and the customer service representative resisted in disrespectful ways. The member posted a recording of the call on his blog. It ignited such a firestorm that the story got picked up by news outlets.

Last month, StopBadware.org labeled the AOL 9.0 desktop software application as "badware," because, among other things, it installs additional software without informing users and forces them to take certain actions.

In this context, Leonsis has decided he wants to devote more time to other pursuits in which he is already involved, like ownership of professional sports teams, filmmaking, philanthropy and venture capital investing.

Leonsis joined AOL in 1993, when AOL acquired Redgate Communications, a digital marketing company he founded.

"AOL is in great hands, and it is absolutely on the right path," Leonsis said in Friday's statement.

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