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RealTime IT News

AOL TV Pulls Plug on New Subscribers

America Online has pulled the plug on its interactive TV foray with digital video recorder company TiVo .

"We are still supporting members but decided to no longer market new set-top boxes for the service in November 2002," said AOL spokesperson Anne Bentley.

She said the product is still available for current subscribers, but that no new subscribers are being added to the service. The company does not break out its subscriber numbers for the service.

The AOLTV initiative was announced in 2000 along with a $200 million investment by the global ISP. Its three-year strategic agreement with TiVo included a plan to collaborate on a dual-purpose AOL-TV-branded set-top box and for TiVo to add its unique features to the service, such as recording and pausing live-TV programs.

It had also struck set-top box deals with Motorola in order to offer AOLTV's features, such as e-mail, Web-based browsing, Instant Messaging and search guides, on digital set-top box terminals before they were shipped. Other set-top box companies involved with AOLTV at one time included Hughes Electronics, Philips Electronics and Scientific-Atlanta.

AOLTV as a concept also launched in a starkly different era for AOL, as regulators were still mulling the then-ballyhooed merger of the world's largest ISP and entertainment conglomerate Time Warner and Wall Street analysts were singing its praises.

At the time, convergence was still the watchword for the merger, which included plans to let AOL subscribers use their televisions to customize content from CNN (an AOL Time Warner property) with the single-click of a button on a set-top box.

It was also a major effort for AOL to begin building its strategy for offering its service to broadband customers, and part of its "AOL Anywhere" effort to extend the AOL brand and service beyond the PC.

But like its rival Microsoft's WebTV, the service ran into trouble in 2001 as the downturn in financial markets and investor confidence began to take their toll.

AOL began pulling back from the service and its agreement with TiVo in 2001. Since then, investors have soured on the AOL Time Warner merger and AOL is working to slash costs and turn around a sharp drop in revenues in the face of a downturn in advertising spending. Among its other headaches, it is trying to put behind it probes by regulators about how it accounted for commerce and advertising revenue during the dot-com heyday of the late 1990s and strike carriage deals with cable operators in order to migrate its mostly dial-up base of 35 million subscribers to high-speed Internet services.

Separately, AOL Time Warner announced today that Jamie Kellner, the chief executive of the Turner Network (another AOL Time Warner unit), would resign and return to a position as chairman and CEO of The WB Network as of the summer of 2004.

The company said Philip I. Kent, who was president of CNN News Group, would replace Kellner, who reported to Jeffrey Bewkes, the chairman of AOL Time Warner's Entertainment and Networks Group.

Kellner's departure is the latest in a string of high-profile departures from AOL Time Warner in recent weeks, including the resignations last month of Ted Turner as vice-chairman and Steve Case, the founder of AOL and chairman of AOL Time Warner, who said he would step down from that role after the company's annual meeting of shareholders in May.