Pittman Quits AOL Timer Warner

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NEW YORK (AP) _ Bob Pittman is stepping down as the chief operating officer of AOL Time Warner Inc. as part of a management shake-up, the company announced Thursday. Two senior executives from the Time Warner side of the company were elevated to senior positions to replace him.

The announcement follows longtime speculation that Pittman had been unhappy with pressures from senior management at AOL Time Warner and was on his way out. Pittman had been dispatched in April to rescue the company's flagging AOL division, whose poor fortunes had been weighing down the stock.

HBO chairman Jeff Bewkes will head up the company's entertainment and networks businesses, and Time Inc. chairman Don Logan will be in charge of a new media and communications group that will include the company's subscription-based businesses such as AOL, the Time Inc. magazines and the nation's No. 2 cable TV operator.

Pittman had been widely associated with lofty promises for growth that the company made to investors shortly after its merger was announced in early 2000. The company never met those targets, and angered investors by sticking to them long after most observers stopped believing them.

Under the new management line-up, Logan, head of the company's highly successful magazine division, will lead a new group of media and communications businesses including America Online, Time Inc. and Time Warner Cable.

Bewkes, the highly regarded head of HBO, will lead an "entertainment and networks" group that will comprise HBO, New Line Cinema, Turner Networks _ which includes CNN _ the WB network, and the Warner Bros. movie studios and Warner Music.

Both executives will report directly to Dick Parsons, the chief executive.

The announcement of the shake-up came after the close of regular trading on the New York Stock Exchange, where the company's shares had fallen 66 cents, or 5 percent, to $12.45 on new concerns about the company's accounting methods.

The shake-up came the day of a regularly scheduled meeting of AOL Time Warner's board of directors.

AOL Time Warner's stock had fallen Thursday after the Washington Post published a lengthy article detailing what the paper called "unconventional" deals to boost revenues before and after the merger that created the world's largest media company.

The article stated that AOL used a number of unusual techniques to boost its revenues in the period between July 2000 and March 2002. The merger between America Online and Time Warner was announced in January 2000.

The story, which was based on a lengthy review of confidential documents from AOL, reported that the company converted legal disputes into advertising deals, shifted revenue from one division to another, sold ads on behalf of eBay and booked them as its own revenue.

John Buckley, a spokesman for AOL, said that all the transactions discussed in the piece were "appropriate and in accordance" with generally accepted accounting principles and that AOL's auditors, Ernst & Young, had signed off on all the transactions.

While the amounts of the deals involved came up to just $270 million, about 5 percent of the company's nearly $5 billion in advertising commerce in the period reviewed, the company would have fallen short of analysts' estimates for ad revenue growth, which would have likely hurt the stock.

What's more, given the fallout from accounting scandals at Enron, Adelphia and Global Crossing, investors have become extremely sensitive to any questions that a company may be using murky accounting techniques to make their results look better.

Parsons, the who took over as chief executive of AOL Time Warner in May, has pledged to make the company more transparent to investors and also to simplify its complex structure. Since Parsons took over, AOL has become much more conservative in making forecasts to investors.

Image Caption: Robert Pittman, chief operating officer of AOL Time Warner Inc., presents his keynote address to Internet World Fall 2001 at New York's Javits Convention Center, Dec. 11, 2001. Speculation has been mounting that Bob Pittman, a veteran of the AOL side of the company, may be about to depart. (AP Photo/Richard Drew)