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Thursday, 18 July, 2002, 22:07 GMT 23:07 UK
Senior AOL executive resigns
Time Warner was acquired by America Online for about $166 billion in stock in what was the biggest corporate merger ever in 2000.
AOL bought Time Warner in 2001 for $106bn
AOL Time Warner has said one of its most senior executives, chief operating officer Robert Pittman, has resigned.

The resignation comes amid increased scrutiny over the media giant's profits.

The media group has dismissed a Washington Post report that it engaged in improper accounting as factually "flawed" and "misleading".


At this point, since a year and a half that the merger has closed, the company has been aimless

Paul Kim, analyst

Robert Pittman served as head of the firm's America Online internet business, having been given the role in April of reinvigorating the online division.

Mr Pittman issued a written statement in which he said it was "time to take a break".

"I've decided that after a new CEO is in place at AOL, I won't return to AOL Time Warner as chief operating officer," he said.

The media giant said Jeff Bewkes, head of TV channel HBO, and Time Inc head Don Logan, would become group chief executives, overseeing many of the company's divisions.

Shake-up

Analysts said the move was part of a management shake-up in which executives from the old Time Warner would resume control of the group.

America Online and Time Warner merged in 2000 in a $166bn deal, forming AOL Time Warner.

"We have the best media, entertainment and communications businesses in the world," said AOL chief executive Robert Parsons, in a written statement announcing the management shake-up.

"But our challenge... is take the lessons we've learned over the past two years and use them to make the parts work together to create greater value for our shareholders," Mr Parsons said.

Other management changes were announced as well, including the appointment of Anne Moore as head of the Time Inc unit and Chris Albrecht to lead the HBO cable-television unit.

Analysts viewed the move as positive. "It's absolutely critical that the company stabilise management and state a coherent and rational strategy going forward, "said Kaufman Brothers analyst Paul Kim.

"At this point, since a year and a half that the merger has closed, the company has been aimless," Mr Kim said.

Share slide

The key resignation occurred on the same day a Washington Post report accused AOL of using unconventional business practices to book an additional $270m (172m) in profits during 2000-02.

Shares in AOL Time Warner had dropped 6% at one point on Thursday in response to the report.

The media group's internet unit America Online (AOL) shifted profits from one division to another over a three-year period to 2002, the Post reported.

The paper also alleged AOL sold ads for online auctioneer eBay but booked the profit as its own.

AOL has denied the report, saying the story "was flawed in its facts and analysis and misleading in its conclusion".

Facing a potential cash crunch because of the dramatic fall in advertising revenue, AOL used the dot.com collapse to its benefit by "renegotiating long-term contracts it risked losing into short-term gains that boosted its quarterly revenue," the Post said.

Shares in AOL Time Warner have fallen 60% so far this year as investors have reacted to a slump in the advertising industry, which provides a key chunk of AOL Time Warner's revenue.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Patrick O'Connell
"This company is not alone amongst media giants in facing tough times"
See also:

11 Jul 02 | Business
25 Apr 02 | Business
26 Mar 02 | Business
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