Jonathan Miller, the new Chief Executive at AOL Time Warner’s
America Online unit, is planning to revamp the way the company strings together ad deals, according to a report in The Wall Street Journal.
The Journal cites sources saying that Miller, who took the post last month, is expected to overhaul the Dulles, Va.-based unit’s nebulous “matrix” structure, in an effort to make the chains of command — and responsibility — more visible.
As part of the restructuring, the company’s advertising sales force will be reorganized, while the specialized Business Affairs unit, which concentrated on striking ad deals between various America Online units — reportedly without much input from the divisions themselves — is expected to be eliminated altogether, the Journal said.
The changes come as a result of interviews of America Online managers about what changes they recommend, the Journal reported. Dolf DiBiasio, AOL’s vice president of strategy and investments, has been overseeing the interviews, and gave the recommendations he gathered to Miller last week, according to the Journal.
The changes come amid concerns that some of America Online’s advertising revenue — as much as $49 million over about eight months — may have been improperly booked. In addition to an internal investigation, the U.S. Justice Department and the Securities and Exchange Commission are looking into AOL’s accounting practices.
The New York Times and Washington Post reported last month that advertising deals with troubled telecoms Qwest Communications
and WorldCom are believed to have been at the heart of the improperly booked contracts. The Journal also said that Oxygen Media is thought to have been involved in the suspect deals.
The papers reported that these deals, and other arrangements, are being checked for evidence of the frowned-upon accounting procedure known as “round-tripping,” in which an ad-seller buys an equal value of products or services from an advertiser. Such an arrangement would mean that each partner could record sales revenue, although there is actually no net gain for either.
Miller’s appointment in early August came amid a sea of other changes at both America Online and its New York-based corporate parent. A month earlier, Bob Pittman, the former chief operating officer at AOL Time Warner, resigned abruptly after taking on the CEO post at America Online in April. Sources at AOL said Pittman, who had risen to prominence as head of the company during the go-go dot-com era, had become frustrated with the mounting pressures facing America Online.
In April and May, America Online rejiggered its top product marketing and ad sales positions while cutting its marketing staff. It also appointed Jimmy de Castro, a former radio executive, to head AOL Interactive Services.