The newly appointed CEO of AOL Time Warner's battered America Online division spent several years as an executive at USA Networks, the company run by Hollywood mogul Barry Diller.
Working for Diller, who once hurled a videotape at one of his top executives, is no walk in the park. And neither is Miller's new job, where he faces a list of problems ranging from decaying employee morale to slowing subscriber growth and declining ad revenue--not to mention infighting between AOL and other AOL Time Warner divisions.
At the same time, the Securities and Exchange Commission and the Department of Justice are scrutinizing AOL's accounting practices, further depressing AOL Time Warner's stock price.
Miller does not step into the role with a grand plan to return AOL to its powerful roots. But he does acknowledge that AOL, and the Internet at large, will not be the transforming force they once seemed. That's a far cry from two years ago, when AOL was the cornerstone in an empire that many believed would not only change the face of media and entertainment, but also bring even more riches to its conglomerate parent.
Miller spoke with CNET News.com on Tuesday about his plans for restoring AOL's luster and the magnitude of the job ahead.
Q:You are inheriting a division that has come under considerable criticism and is now under investigation by the DOJ and SEC. Why take this job?
A: (Laughing) AOL, despite all the other kinds of noise, is the dominant, greatest interactive media platform in the world. It has more users connected than any other platform in the world, and it's tremendously exciting. The things that are going on here and the business issues that have been raised--I believe to be addressable by having a focus on the user and the product, and driving value for that user.
What went wrong at AOL?
I don't know I'm entitled to say, but it just seems that there was a focus on taking all the money off the table when so much was available--which you can't begrudge anybody--that perhaps (AOL) lost a bit of focus in developing value for users.
How do you strike a balance between what consumers want--and they don't want pop-up ads--while at the same time trying to address revenue concerns?
Here's the great thing about interactive media, and you can apply it to all media over time: People follow their passions for what they're interested in. This particular form of media allows you to do it more readily than any other that's previously existed. And if you enable people to do that, they will not only tell you what they want, they will act on it. So if you give people things in context, in following their own desires, then it's appreciated and very valued.
I think the issue you raised with pop-ups is that they are certainly not (relevant enough for AOL subscribers to click). I've responded to pop-ups in the past. I've been an AOL subscriber for six years, and I've bought some stuff. One of the reasons why I bought was because it's easy and they already have my billing information. That's not bad. But if you can drive these things to be more and more personalized over time, they get higher and higher perceived value and higher and higher acceptance (among consumers).
I think all the promises of the Internet are true except for one--that it replaces everything else.
I think I'm adaptable. The reason why I'm adaptable is because I think about brands and people and how people respond in different situations. Here's the thing: I'm the same person who watches TV, who talks on the telephone, who goes online, who shops at the store--it's all me. You do it, too. If you understand how to speak to that consumer, then doing it in these different ways only makes sense. As an executive, I've been lucky and had the opportunity to do it in different ways and also in different places geographically and in different organizations.
You're taking a role in a company which has completely changed who's running the show. So where do you view AOL's place in AOL Time Warner?
I've said this before and I'll probably say it again: I think all the promises of the Internet are true except for one--that it replaces everything else. It doesn't happen. TV didn't replace radio, electronic media didn't replace magazines, et cetera. It's always additive.
AOL and interactive media have a clear role; I think it will always be around from now until forever. But that doesn't mean it will be the only thing that exists. It's a complement to other aspects of media. That is our role. We are a complementary partner to the other brands and content in the company. In that sense, I'm a kid in the candy store.
How much autonomy are people like Don Logan (AOL Time Warner's head of media) and Dick Parsons (AOL Time Warner's CEO) giving the AOL division?
Don has made it clear that he's not a micromanager, so I don't think autonomy is a big issue. At the same time, one of the attractions of this job (for me) was Don himself. I want Don's involvement, and Don has pledged to me that he's going to be directly involved with me a couple days a week for a period of time. Over time, that will probably change, but in these early days it's exactly what I want, and he's committed to that.
Recently, the biggest issue at AOL has been the practice of bartering advertising for software or warrants of ownership. Will you discontinue that practice?
We're just going to be squeaky clean. By the way, that doesn't mean they haven't been, and I'm not going to judge something that I'm not in any position to speak to. But we're going to be squeaky clean as policy.
What do you mean by "squeaky clean?"
Whatever is determined to be absolutely in the bounds of completely upfront standards and practices. And there will be policies in this regard. By the way, there probably are today--I just don't know. All I'm saying is that I've always conducted myself in business in that way.
There are lots of personalities at AOL. How are you going you fit in--particularly with (AOL vice chairman Ted) Leonsis, who appears to be taking a greater role in the company?
I'm just getting to know Ted a little better. We know each other a little bit, but not extensively. Every word I've read that he's been quoted saying, I agree with--and I told him that today.
Do you need some trimming down of top management?
AOL has the time to be the absolute leader in developing a compelling broadband product, and I do think that will be a focus for the company.
Subscriber growth has slowed, as evidenced in AOL Time Warner's last earnings report. Do you think AOL has hit a ceiling for dial-up subscriber growth? And where is the opportunity for broadband?
I don't know the answer on the wall of subscriber growth. But it's clear the law of big numbers starts to take effect at some point. It may well be in terms of absolute numbers of new subscribers that you may have some difficulty maintaining the growth rates of the past. That said, I'm not sure that should be the driving metric. One thing we need to look hard at is whether subscriber profitability is the real determinant of the business.
What about broadband?
I love broadband! I'm a techie in that regard--I can't wait for that to be prevalent throughout the world. But we're going to wait. It's not going to happen tomorrow morning. I'll give you an example. I'm fortunate enough to have two homes. In one home in Westchester, I cannot get broadband installed and I've tried very hard. And in the second home, I do have it installed but it took over 100 hours to get it installed.
What's really happening is, what are the drivers of usage and uptake? The cable industry has thrown its weight behind subscription video-on-demand, and that may not be getting off the ground as the main driver. So it's not clear to me how quickly it's going to come into play. What is clear to me is that AOL has the time to be the absolute leader in developing a compelling broadband product, and I do think that will be a focus for the company.
Even with the efforts by Microsoft's MSN and now Yahoo's digital subscriber line deal with SBC Communications?
My going-in perspective is that AOL wants to be everywhere. We want to be in DSL. We want to be in broadband cable. What you're asking is can we compete? Of course, we have to compete.
How much control you will have in dictating where the broadband strategy goes? There are still lots of questions about whether you will do a deal with AT&T Comcast.
The good news is the other executive in the company who would be determining that strategy is Don Logan, together with Dick Parsons of course. I feel very comfortable that my interests at my new position in AOL are aligned--certainly with my immediate supervisors and beyond that--with the company at large.
What is your MO?
Well, I think I'm a team builder. I really like working as part of a team. I really like making decisions; I like robust, honest dialogue where the best idea wins. And I really like to lead and to galvanize organizations.
What is the top thing on your to-do list?
My job No. 1 is to immerse myself and to learn as much as I can. Already, I can see there's a tremendous amount going on in lots of great areas that haven't been the focus in the press or on Wall Street. And then to put in place a process to create a business model and business plan.
What are we missing in the press or not seeing?
That there's a lot of product work going on. The focus in the press has been on certain metrics that might not be the right metrics for the future of the business. But listen, that's our job to articulate to you. I can't do that on day one, but we are going to do that.
Then what should we be paying attention to?
That's what I'm saying, I don't want on my first day to call the game.
But you must have been thinking about this for a while.
Do I have ideas and instincts? Of course I do. But what I have to do is get in and learn. And the best thing I can do right now is have the most open mind as possible and absorb. You can't absorb if your mind has already determined the answer before you enter the room.