Magazine article Newsweek

You've Got ... a Company to Fix! Jeff Bewkes Had a Lot to Say about AOL's Problems. Guess What? Now He's in Charge of Solving Them

Magazine article Newsweek

You've Got ... a Company to Fix! Jeff Bewkes Had a Lot to Say about AOL's Problems. Guess What? Now He's in Charge of Solving Them

Article excerpt

Byline: Johnnie L. Roberts

Jeff Bewkes wasn't very good at keeping his comments to himself. In 2000, when Bewkes was the CEO of HBO, he was critical of America Online's plan to purchase his network's parent company, Time Warner, for $182 billion in stock. The Internet bubble began bursting and deflated the worth of the new-media/old-media marriage before the deal was even official. (It ultimately shed more than $200 billion in shareholder value.) "You had to wonder if it were a good idea" to proceed, Bewkes tells NEWSWEEK. In 2001, while still at HBO, he piped up again when AOL started losing subscribers who wanted high-speed service. Bewkes pushed AOL to embrace broadband, but corporate bosses didn't heed his advice.

So who better than Bewkes, who rose through Time Warner's ranks to become its COO last year, to oversee the plan to salvage AOL? Last week he and AOL CEO Jon Miller announced that the company would give its services away to anyone with a broadband connection. They also told 5,000 employees--a quarter of the work force--that they would be out of jobs by early next year, a move AOL expects will chop $1 billion in annual costs. Time Warner is betting that this savings, plus increased online ad revenue, will raise AOL's earnings even as paying subscribers quit. About 9 million have defected in the past four years; AOL has just under 18 million customers who pay monthly charges of $9.95 to $25.90 for dial-up access.

AOL's success depends on whether marketers flock to it to reach the new users it expects to lure with free offerings. They include "in-studio" performances by musicians, video shorts, e-mail and instant messaging--a "tremendous set of services," says Bewkes. AOL also owns Moviefone, MapQuest and TMZ.com, which broke the story about Mel Gibson's drunken-driving arrest. "I believe the strategy . …

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