September 18, 2003 10:58 AM PDT
AOL Time Warner drops AOL from name
AOL Time Warner will make the conversion in the next few weeks. Its ticker symbol on the New York Stock Exchange will change from "AOL" to the older Time Warner symbol, "TWX."
"We believe that our new name better reflects the portfolio of our valuable businesses and ends any confusion between our corporate name and the America Online brand name for our investors, partners and the public," AOL Time Warner CEO Richard Parsons said in a statement.
The change, which has been widely anticipated for months, offers a symbol of closure for an embarrassing period that many in the company would now like to gloss over or forget entirely. Since America Online and Time Warner merged in January 2001, the combined entity has lost billions of dollars in shareholder value largely due to a crumbling AOL.
The online division is being investigated by federal regulators for its accounting practices and is suffering from drastic revenue declines due to subscriber defections and a poor climate for online advertising. Most of the architects of the deal, such as former CEO Gerald Levin, former chairman Steve Case and former chief operating officer Bob Pittman, have been ousted.
Indications of a possible name change surfaced in August when Jonathan Miller, CEO of the AOL division, approached AOL Time Warner CEO Richard Parsons with the idea, according to a company memo. As the story goes, Miller told Parsons that the AOL brand was being diluted every time a new controversy surfaced about the parent company's troubles.
"As AOL Time Warner became known as, for all intents and purposes, 'AOL,' any controversy or criticism involving the corporate entity has actually hit our consumer brand," Miller wrote in the e-mail memo, which AOL Time Warner representatives released.
However, calls for a name change have been batted around for more than a year. Last summer, a few board members and influential shareholders were reportedly trying to remove Case as chairman and drop the AOL moniker from the company's name. Case eventually resigned as chairman in January 2003, but was re-elected to the board of directors in May.
Those seeking the name change reportedly wanted the company to return to its roots as a media empire instead of being associated with AOL's scandals and financial problems. Indeed, Time Warner businesses--the Warner Bros. movie studio, magazine publisher Time Inc., Time Warner Cable and cable stations such as HBO, among others--have continued to flourish during the past two years of AOL's decline.
As for AOL, the division is frantically trying to maintain its online dominance. Despite the fact that AOL still has more dial-up subscribers worldwide than any other Internet service provider, its base is slowly shrinking. Last quarter, the company lost 846,000 subscribers due to a correction in the way it counts subscribers and because of ongoing subscriber defection to broadband.
AOL in July launched a new version of its service in hopes of enticing dial-up consumers who are considering upgrading to broadband. Called AOL 9.0 Optimized, the service emphasizes multimedia content, more personalization and a splashier design.