September 15, 1999 7:05 PM PDT

Time Inc. decentralizes Internet business

Time Incorporated is decentralizing its new media business, assigning online responsibilities to its respective magazine divisions such as Time and People, according to an internal memo circulated at the media giant today.

The move marks yet another restructuring of Time's Internet business, which struggled under the Pathfinder Web strategy.

Although Time's Net activities are being revamped, a smaller central new media group named Time Interactive will be formed--replacing Time New Media. Eileen Naughton, former vice president and director of finance, will become president of Time Interactive and become the senior executive responsible for the company's Internet strategy.

"Simply put, this means that the responsibility for the various magazine Web sites, currently housed at Time New Media, along with their attendant business and editorial functions, will return to the respective magazine divisions," said the memo, written by Time chairman and chief executive Don Logan. "So, for example, Time.com and Time Digital will go to Time; People Online and Teen People.com will move to the People Group--and so on."

The memo said division presidents will be responsible for the development of the online businesses. The decentralization will also "further align Time Inc. brands with Time Warner's evolving Internet strategy, defined by the vertical hubs built around consumer interests."

It went on to say: "Time Inc. Interactive will also operate as a clearinghouse for all Time Inc. Internet deals with outside vendors, search engines, technology partners, and others. In addition, Time Inc. Interactive will coordinate with Time Warner Digital Media."

In addition, Time Warner Digital Media said that Bill Burke, president of TBS Superstation and Turner South, will become president and CEO of news and information for Time Warner Digital Media, effective October 4.

A focus on "hubs"
The dissolution of Time New Media wipes away the last remnant of Pathfinder, the division's Web hub for Time's numerous magazines. Time Warner to shutter Pathfinder Time in April said it would shutter Pathfinder because most of the site's traffic was going to the individual magazine sites, such as Time.com and Fortune.com.

The Pathfinder brand drew a great deal of criticism; not only was it a new brand for the company to establish and build, but the name itself didn't illustrate the site's purpose to users.

Instead of building Pathfinder, parent company Time Warner decided to pursue a strategy to launch a handful of Web "hubs" focusing on specific topics, such as news, finance, sports, entertainment, and lifestyle. For example, the entertainment hub, called Entertaindom, is expected to launch this fall.

Time Warner also formed a separate division called Time Warner Digital Media and appointed former chief financial operator Richard Bressler as its new chief executive. Bressler will oversee the hub initiative, as well as its investment in cable ISP Road Runner. Michael Pepe, a former Fortune executive who later became head of Time New Media, was appointed chief operating officer of the division.

The establishment of Time Warner Digital Media gave the parent company centralized control over all of its Internet properties, including CNN Interactive and Warner Bros. Online, as well as the newly established Time Interactive.

Unlike its media rivals Disney, NBC, and Viacom, who are in line to take their Web properties public, Time Warner remains uncommitted to the idea. Company sources said one of the dilemmas Time Warner faces is whether to spin off individual Web properties or to spin off all the hubs as one.

Regardless of what Time Warner does, critics say, the company should decide on something fast, because many executives in its Web divisions have left. Some of the higher-profile departures include those of Linda McCutcheon, former president of Time New Media, and Lou Dobbs, former president of CNNfn and longtime CNN veteran.

News.com's Jeff Pelline contributed to this report.

 

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