Pittman May Exit AOL-TW Mess

Robert Pittman’s temporary status as head of America Online may also describe his thinking about whether he’ll continue as chief operating officer at AOL Time Warner , The Wall Street Journal reported Friday.

Citing unnamed sources with inside knowledge of the intrigue, the newspaper said AOL Time Warner’s search for an executive to replace Pittman as acting head of the online service has fueled “uncertainty about the continued tenure” of Pittman as COO with the corporate parent.

Quoting sources close to Pittman, the report said the 48-year-old executive is growing tired of the pressures at AOL Time Warner, “leaving open the possibility that he will choose to leave the company altogether rather than return to New York when the AOL chief slot is filled.”

Although executives told the newspaper that he hasn’t been acting as COO over the past couple of months while he tries to get AOL back on track, no one has ruled out Pittman’s resumption of the COO job either. “But a key factor is sure to be the performance of America Online over the next few months.”

Pittman was said to be attending the annual media mogul confab in Sun Valley, Idaho and was not available to comment on the report.

The former head of AOL returned to the unit last April when he was dispatched to AOL headquarters in Dulles, Va., with a mandate to shore up the ISP as it struggled to withstand the collapse in online advertising and slowing subscriber growth.

At the time, the announcement said Pittman would head up AOL while its former chief Barry Schuler was moved to a new digital media services unit. The expectation was that Pittman, who was still COO-elect of the corporate parent at the time, would eventually vacate the AOL slot and return to corporate headquarters in New York once AOL was humming along again.

But the Journal report said it “is likely that AOL will appoint a new chief executive for the unit well before a recovery is evident. What’s more, executives acknowledge there is no certainty Pittman will resume the full duties of chief operating officer when a successor is named to run America Online.”

The report speculated that if Pittman did choose to leave the company altogether, then AOL Time Warner CEO Richard Parsons might not have to fill the slot so soon, “as most of the divisional chief executives are highly regarded within their industries.”

Two weeks ago, the report continued, the company hired executive-search firm Spencer Stuart to fill the AOL top position. Unnamed sources said the search includes internal and external candidates — although an outsider would be expected to make the final cut on any short list that may be in the works.

Among the names to surface as possible candidates was Don Logan, the chairman of Time Inc., which pursues a similar subscription/advertising business model, the report said. Other names that came up were Michael Kelly, AOL’s COO and former CFO of the corporate parent, and James de Castro, the radio executive who recently joined AOL.

As for names that may come up if Pittman vacates the COO slot, the report cited Jeffrey Bewkes, chairman of the company’s Home Box Office cable channel, and Time’s Logan also.

A spokesman said the search for the AOL replacement was consistent with what the company planned when Pittman was sent to AOL in the first place.

In related news coming out of investment banker Herb Allen’s legendary invite-only media mogul gathering in Sun Valley, the Financial Times’ Web site FT.com is reporting that John Malone, the head of cable holding company Liberty Media and a major shareholder of AOL Time Warner, is urging the company to untie its partnership with AT&T regarding the Time Warner Entertainment group.

Now that the merger of AT&T’s cable/broadband division with Comcast has shareholders’ blessing, Malone is said to be urging AOL Time Warner’s CEO Parsons to find a way to unwind AT&T’s 25 percent stake in the Time Warner Entertainment division.

The report said if AOL Time Warner were to find a way to undo the complex partnership, it would be another step in easing concerns about AOL’s financial position and help the company become more simple to understand. Problem is, AOL Time Warner is not all that interested in adding to its debt burden while it looks for ways to increase its cash flow.

Malone made his comments “on the fringes” of the Sun Valley gathering. “My best piece of advice [to AOL] is see what you can do with TWE,” he told FT.com.

“Solving it would be a great benefit to both companies,” Malone told the paper, adding that he had discussed the issue with Ted Turner, the media entrepreneur and AOL Time Warner board member who is also AOL Time Warner’s largest shareholder.

Liberty Media holds about a 4 percent stake in AOL Time Warner. Malone didn’t comment on any possible deals in the works about the TWE ownership structure.

That both reports have apparent connections to the Sun Valley gathering and are about difficulties arising from media mergers carries a note of irony. It was at past gatherings that ideas for major media mergers sprouted, such as the massive AOL, Time Warner marriage. Since merging, however, the union has grown rocky in the midst of a severe advertising recession and the dot-com collapse that helped drive AOL Time Warner’s stock price down by 74 percent in the past year.

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