RealTime IT News

Time Warner Nixes AOL From Nameplate

It's official: AOL is off the corporate nameplate of the world's largest media company, AOL Time Warner, as it repositions itself to reflect a media conglomerate doing business in the post Internet-boom era.

As previously reported by internetnews.com, the board of directors of AOL Time Warner voted to remove AOL from the corporate name Thursday.

But Time Warner executives stressed their commitment to the corporate marriage of AOL and Time Warner -- despite the three turbulent years that followed the once-ballyhooed merger of AOL's ISP assets with the Time Warner family of publishing, broadcast, film and music businesses.

AOL's well-documented troubles include plummeting ad revenues following the bursting of the dot-com bubble and ongoing regulatory probes of how it booked ad deals during the dot-com heyday.

In a company-wide internal memo to employees today, Richard Parsons, the CEO of what's to be known as Time Warner, said the next few weeks would see the company's ticker symbol changed from "AOL" to "TWX," which was Time Warner's ticker before the AOL merger.

"We believe that our new name better reflects the portfolio of our valuable businesses and ends any confusion between our corporate name and the America Online brand name for our investors, partners and the public," Parsons' memo said.

In addition, Parsons' memo said, the name change would strengthen the identity of the AOL brand among consumers. "As you all know, America Online is an important part of our company, and we expect it to continue to make major contributions to our success in the future."

As for whether the name change signals a future spin-off of AOL from the corporate fold, the company has stated that the priority is for Time Warner to turn AOL around and return it to a growth track. AOL executives laid out that turnaround plan last December, including a more focused strategy on growing its broadband subscribers.

Indeed, for all of AOL's woes, such as 1.2 million fewer dial-up subscribers than at the same time last year, and an expected 40 percent decline in advertising-related dollars during 2003, the ISP is still profitable and generates some $1 billion in cash flow each year. Cash like that doesn't hurt when its corporate parent is trying to reduce its net debt from its current $24.2 billion level to $20 billion by the end of the year.

For now, AOL is delivering on its financial outlook, officials say, and is making progress on its strategic plan, part of which involves the upcoming release of AOL's latest client called 9.0 Optimized, which a source familiar with the situation has said will go into widespread launch on Oct. 12th.

Jed Kolko, broadband and consumer products analyst for Forrester Research, called the name change a milestone, both for the company and the business world in the sobering three years that followed the bursting of the dot-com bubble in 2000.

"We've all been marking the end of that boom in different ways," he said. "The removal of AOL from the corporate name has symbolic importance beyond just for Time Warner."

Kolko said it's too easy to blame AOL as a symbol of the excesses of the Internet boom. "AOL dominated a very important market -- the dial-up market," he said. "And it's now facing something that that all the dial-up players faced: which is that narrowband subscribers have peaked."