AOL Time Warner CEO resigns under pressure

AOL Time Warner Inc. on Thursday shook up its top management ranks, a concession that the biggest merger ever between technology and entertainment has fallen short of its hype.

The latest casualty in the company's financially dismal year was Robert W. Pittman, who resigned under pressure as chief operating officer of the corporation and head of the struggling Internet flagship, America Online.

Pittman had been a key architect of the merger between Internet giant AOL and Time Warner, and was widely blamed for its failures.

In the wake of upstart AOL's $106 billion purchase of venerable Time Warner 18 months ago, Pittman, 48, had been touted as a whiz kid and potential successor to then-chief executive Gerald Levin, who himself was forced out in May.

Instead, Pittman, a college dropout who founded MTV networks, is departing as the company's stock slid 61 percent so far this year and 78 percent from its post-merger peak. Pittman's replacement by two veteran Times Warner executives puts the old media executives very much back in control.

Whether unfairly or not, Pittman was most closely identified with the company's efforts to integrate its operations by, for example, coordinating advertising and marketing efforts across the film, TV, music, publishing and Internet platforms. That push met increasing resistance from the operating divisions, especially in the last year, as the advertising market has crumbled.

The advertising downturn, which hit America Online especially hard, helped erode Pittman's authority, analysts said.

Indeed, Thursday's moves underline the stunning reversal of fortune that has taken place since the merger.

When the deal was first announced, in January 2000, AOL was riding so high on the crest of the Internet stock wave that it was able to offer $163 billion worth of its shares for Time Warner, which the stock market then valued at only about $100 million, despite its having three times as much revenue as AOL.

The merger was presented as a way to tie Time Warner global brand names in news and entertainment-from CNN to Time magazine to Warner Bros. studios-to the apparently untiring growth engine of the Internet.

Today, American Online is the only part of the company that is conspicuously slumping. 'The rest of our businesses are, frankly, shooting the lights out," said Richard D. Parsons, the Time Inc. veteran who took over as AOL Time Warner chief executive in May.