Schuler steps aside as AOL chief, Pittman tapped

America Online (AOL) Chairman and Chief Executive Officer Barry Schuler is stepping down from his post to head a new digital division of AOL Time Warner Inc. (AOLTW), the company said Tuesday.

Schuler, who will become the chairman and chief executive officer of AOLTW's new Digital Services Development Group, will be replaced by AOLTW Chief Operating Officer-elect Bob Pittman. In addition to returning to his spot atop AOL, where Pittman resided before America Online Inc. and Time Warner Inc. merged, Pittman will retain his position as COO-elect, the company said.

The management changes are effective immediately.

The new unit of the New York company will focus on interactive products, such as home networking products and online music delivery, that are expected to drive growth for the recently merged company, AOLTW said in a statement.

The new unit's plans are still nebulous: None of AOLTW's existing products or operations are being transferred to the group, and no new products are yet in the works. Schuler is currently the unit's only employee, according to AOL spokeswoman Tricia Primrose.

The group will focus on services opportunities such as "the digital home of the future," she said.

"The question is, how do we bring digital services to consumers that they will embrace and use?" Primrose said. "Certainly, (Schuler) is the guy to address that. He has real expertise in understanding consumer use of digital services."

AOLTW has been eyeballing an array of subscription services as a way to maximize profit from its legion of subscribers, which the company says now total 148 million, including its cable, media and ISP (Internet Service Provider) businesses. AOL has 34 million subscribers, according to the company.

In a December keynote address at Internet World, Pittman described AOL's vision of tripling its per-user revenue by offering a host of add-on services: US$20 for a monthly music subscription, $10 for interactive television, $15 for games, and so on.

"We think our future is looking at the consumer and bundling these sorts of services. The future revenue potential per online subscriber is huge," Pittman said at the time. "How does a company the size of AOL Time Warner grow? You grow by investing in new businesses."

AOLTW hasn't been doing much growing lately, however, which probably figured into the management shakeup. The company has already warned investors to expect flat revenue figures for the just-ended first quarter, following a shaky fourth quarter in which the company posted a $1.8 billion net loss. AOL has been a trouble spot in the company's portfolio, plagued by slowing subscriber growth and a weak advertising market.

Getting AOL's advertising business "back on track" will be one of his top priorities, Pittman said in a prepared statement.

AOLTW is also preparing for a changing of the guard in its executive ranks. Next month, Richard Parsons will ascend from his current co-COO position to replace the retiring Gerald Levin as the company's CEO. The move will leave Pittman as the company's sole COO.

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