Schuler steps aside as head of AOL

NEW YORK - Barry Schuler is stepping aside as the chief executive of America Online, the struggling division of the AOL Time Warner Inc. media conglomerate, and his duties will be taken over by Bob Pittman, the incoming chief operating officer of the company. <br> <br> The switch announced Tuesday comes as investors have been disappointed with the performance of the online division, where growth has been slowing from its previous supercharged pace. Revenues from advertising and commerce at AOL fell 7 percent in the fourth quarter. <br> <br> In addition to overseeing AOL&#39;s operations, Pittman, who headed up AOL before it merged with Time Warner, also will continue in his role as the new chief operating officer of AOL Time Warner. <br> <br> Schuler will lead a new division charged with developing new digital services for AOL as well as for other parts of AOL Time Warner, including home networking and digital music delivery systems. <br> <br> Schuler&#39;s reassignment comes just weeks before AOL Time Warner will formalize other executive changes in its top ranks. Dick Parsons, currently a co-chief operating officer along with Pittman, will take over as chief executive in May from Jerry Levin, who is retiring. <br> <br> Parsons said Pittman was taking over AOL at a time of ``both opportunity and challenge. ... The challenge facing us at AOL is to improve the performance of its advertising business in the current advertising slowdown by building on AOL&#39;s unique competitive position and capabilities.&#39;&#39; <br> <br> AOL Time Warner has already warned investors to expect flat results for its first quarter as the company continues to struggle with the advertising downturn affecting its ad-driven businesses such as magazines and cable channels like CNN and TBS. <br> <br> The slowdown in growth at AOL has been particularly disappointing to investors, who had seen the division as a catalyst for driving the creation of new business opportunities in other parts of the company. <br> <br> Growth in AOL&#39;s acquisition of regular dial-up customers has been slowing, and the process of upgrading them to the more profitable high-speed connections has also been slower than some had expected. <br> <br> Merrill Lynch analyst Jessica Reif Cohen, who downgraded AOL Time Warner&#39;s stock last fall from ``buy&#39;&#39; to ``neutral&#39;&#39; because of concerns over the AOL segment, said she expects pretax earnings at the division to fall 11 percent in the first quarter. <br> <br> ``We still believe this to be the greatest issue facing the company,&#39;&#39; she wrote in a report to investors last week. <br> <br> AOL&#39;s stock, which is down by more than half from its level before the merger was announced, fell 10 cents to close at $21.85 Tuesday on the New York Stock Exchange.

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