- The Washington Times - Wednesday, November 15, 2006

From combined dispatches

In a surprise move, Time Warner Inc. named a veteran television executive yesterday to head its Sterling, Va., AOL subsidiary at a time the online unit is evolving to become more of a media company supported by advertising dollars.

Randy Falco, 52, president and chief operating officer of the NBC Universal Television Group, replaces Jonathan Miller, who spent four years trying to turn AOL around and had just embarked on a seismic strategy shift. Mr. Falco’s start date has yet to be set.

Mr. Miller’s departure comes less than four months after Time Warner announced that following years of decline in AOL’s core Internet access business, the company would give away AOL.com e-mail accounts, software and other features once reserved for paying customers in a more aggressive chase for advertising dollars.

Time Warner Chief Executive Officer Richard Parsons, who on Tuesday said that AOL had “turned a corner,” is hiring a TV veteran to help attract advertisers, a move analyst Laura Martin called a “surprise.”

Mr. Falco is leaving the NBC Universal unit of General Electric Co. after the broadcast network slumped to last place last season and decided to cut 700 jobs to save money.

“AOL is showing early success in transitioning to an advertising-focused business model, and Randy is a first-rate choice to ensure AOL realizes its promise,” Mr. Parsons said yesterday in a statement.

“Falco is not the most obvious choice,” said Ms. Martin, an analyst at Soleil Securities in Pasadena, Calif., who rates Time Warner shares “buy.” “After more than 30 years in the culture of NBC, it will be interesting to see how Falco will adjust to the culture of the Internet space.”

Although Time Warner executives have been supportive of Mr. Miller’s efforts to set AOL on a new course, they were looking for someone with operational experience to execute the plan.

“With his proven success in operations, business development, video programming and advertising-supported businesses, Randy brings the right tools to run AOL at this important time in its history,” Time Warner Chief Operating Officer Jeff Bewkes said in a statement.

Time Warner said Mr. Falco and Mr. Miller were unavailable for interviews yesterday.

In a statement, Mr. Miller said: “Rarely do you come into an organization with as many challenges as AOL faced when I arrived and then have the great satisfaction of putting it on sound footing. I’ve had that opportunity at AOL over the past four years, and I’m proud of what we’ve accomplished.”

Since last year, Mr. Falco has been responsible for NBC Universal’s commercial and operational functions, including network and cable sales and business development. Previously, Mr. Falco was president of the NBC Universal Television Network Group and group president of the NBC Television Network.

His work at NBC gives him experience with delivering free programming sponsored by advertising as well as with video, one of the key areas AOL has targeted for growth.

Earlier this month, Time Warner announced that AOL saw its largest quarterly drop in paying subscribers, although the accelerated decline was expected in light of the strategy shift.

Mr. Miller, 50, who previously worked for a company that provided information and Internet services, joined AOL in 2002 just as the company began seeing declines in paying subscribers.

In late 2004, Mr. Miller began breaking down AOL’s historic “walled garden” of exclusivity and made most of the company’s news articles, music videos and other features free on its Web sites. The transition accelerated with the announcement in August that e-mail and most other remaining services also will be free.

Earlier this month, Time Warner announced that AOL saw its largest quarterly drop in paying subscribers, although the accelerated decline was expected in light of the strategy shift. Traffic to the company’s free, ad-supported Web sites held steady, prompting Time Warner executives to declare their online unit’s new strategy on track.

AOL LLC, formerly known as America Online, is majority-owned by Time Warner, with Google Inc. owning 5 percent. Time Warner shares rose 10 cents to $19.98 yesterday on the New York Stock Exchange. The announcement came after the market closed, though the New York Times reported yesterday morning that Time Warner was courting Mr. Falco.

Time Warner shares have gained 15 percent this year.

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