Incoming AOL chairman and CEO Jonathan Miller's task is a daunting one: turn around the No. 1 ISP's business and unclog its revenue streams.
Miller, until recently the CEO of USA Interactive's USA Information and Services, will take over for former online head Barry Schuler, who resigned in April amid rising scrutiny of AOL's slowing cash flow and ad revenue intake. That was followed by the forced resignation last month of AOL Time Warner Inc. chief operating officer Robert Pittman.
A cable veteran, 45-year-old Miller's background includes a stint from 1993 to 1997 at Viacom Inc.'s Nickelodeon/MTV Networks, where he was in charge of all activities outside the United States.
At AOL, his task will be to reverse the company's flagging earnings before interest, taxes, depreciation and amortization (EBITDA), patch up a decimated ad-revenue pipe and revive the ISP's commerce strategies.
He also inherits ongoing investigations by the Securities and Exchange Commission and the Justice Department into possible accounting irregularities, and shareholder suits filed in Texas and New York charging the ISP with securities fraud.
Still, the fact that parent AOL Time Warner Inc. looked outside for the ISP's new chief is a good sign for AOL, according to Rob Lancaster, an Internet analyst at The Yankee Group.
"What I do know is it is a good thing they brought in an outside person, and it is one thing I have been looking for," Lancaster said. "When you have been a market leader in a space for so long, it becomes very difficult to step outside of yourself and be able to identify flaws and make major adjustments."
"We have seen so much management turmoil since the merger a year and a half ago, and none of it has been successful — and all of it has come from within. There is a pattern there," Lancaster said.
Miller's main challenges include AOL's subscription base, its ad revenue model and its commerce operations, and he seems to have experience in all three, according to Bruce Leichtman, principle analyst at Leichtman Research Inc.
"I think the biggest challenge for anyone would be prioritization," Leichtman said. "What comes first? Where do we start? Do we start by figuring out a broadband strategy, do we start by reinforcing our ad rates or do we start by figuring out how we continue to grow commerce revenue? How do we prevent churn? There are so many issues that are on the negative side, but on the positive side, you still have a product in AOL that has almost half of the people online in the U.S. And that is amazing."
