AOL's new free-for-most plan is the idea of Jeff Bewkes, Time Warner’s chief operating officer, says The New York Times. It would generate thousands of job cuts and forfeit $1 billion in operating profit for the AOL unit.
Bewkes is said to be the most-likely-to-succeed chief executive Richard Parsons in 2008. The AOL division head, Jonathan Miller, may have ambitions, too. The Journal Times says he is an "enthusiastic" supporter of the plan for AOL. In an interview with the Hollywood Reporter last year, a reader could have inferred Miller favored this kind of new strategy.
I don’t know if it will work, giving up subscription fees for the hope that being a free uber-portal will produce greater profits. But I do believe it will help the price of Time Warner stock.
Since Miller took over AOL almost four years ago, he’s made progress. But each quarter, he got no respect. No acquisition, no increase in advertising sales, no billion dollar investment from Google or cost cutting moves were enough to distract the analysts from that one element of every financial report: the number of paying subscribers who left the rolls.
At the end of 2003, it was 400,000; in the first quarter of this year, it was off another 835,000.
Now that burr under the saddle can go away.
Future quarterly reports can focus on advertising sales increases. Ad sales, industry-wide and for AOL, are growing. There is no doubt subscription revenue is shrinking. It’s gotta be like water torture inside the AOL marketing department, sometimes with disastrous results.
As a long-time AOL-then-TWX shareholder (1995 at $5/share), I watch this story with more than a little interest. The 10-year stock chart shows what happens when you fall in love with a technology, and then a stock. Talk about lows and highs and, now, lows.
Anyway, I feel a little bit like Merrill Lynch’s Jessica Reif Cohen. Late last week, she told The Times, she has lost count of the number of AOL revival plans. “This one seems to make sense,” she said, “but so did their other strategies.”
Time Warner might also get a break. That predictable, regular, expected and maybe, to some, "amusing, negative, AOL's lower subscriber count, will be gone. AOL’s choice of new metrics will show growth. And maybe the Time Warner stock will, too.
Comments