AOL gets new old head

NEWS The CEO of AOL has been demoted by the board of AOL Time Warner and replaced by the man who used to run the ISP when it was an independent business. Bob Pittman will take now direct control of AOL once again in a bid to revive flagging advertising revenues. He moves back to AOL from AOL Time Warner, where he served as COO. Outgoing AOL CEO Barry Schuler will become head of a newly created "digital services" division, charged with inventing new AOL products for the broadband age. The move is an unceremonious demotion for Schuler who had held the CEO reins for just over 12 months. A statement by AOL Time Warner did not attempt to hide the reasons for the shift. It said "The challenge facing us at AOL is to improve the performance of its advertising business in the current advertising slowdown." AOL Time Warner's advertising revenues have slipped in recent quarters, after first proving resilient to the downturn facing the rest of the industry. At its last quarterly results advertising revenues were down 14 per cent on the year before. Pittman ran AOL's operations before it bought Time Warner at the start of 2000, and the firm is now looking to his guiding hand to rescue it from the current advertising slough. Pittman said his immediate focus will be to get the advertising business back on track. AOL gets a third of its revenue from advertising and ecommerce and while the remaining subscriptions business is still healthy, ad revenues are ailing. AOL's falling revenues have been mirrored by a falling share price, which has seen the company lose three-quarters of its value since the merger. The announcement can be seen as a bid to engender investor sympathy just two weeks before more uninspiring quarterly results. AOL has been tight-lipped as to whether Pittman's intervention is seen as a permanent solution to the company's woes or if it will search for a new CEO for AOL. Barry Schuler said in a statement he was "excited" by the prospects of his new role creating new products and services. As CEO of AOL he controlled 18,000 employees. His new unit currently has no staff.