Walter Isaacson, chairman and CEO of CNN News Group, a division of AOL Time Warner Inc., resigned Monday, one day after AOL luminary Steve Case tendered his own resignation.
The departure of Case from the chairmanship of AOL Time Warner is widely seen as a positive symbolic gesture for the telecom/media behemoth, and one that will likely signal the rise of content provision over access provision, analysts said.
“While they have a lot of great servers and great switches all over the place, they dont have the pipe to the home or small business,” said Jonathan Gaw, analyst at IDC Research Inc. in Mountain View, Calif. “The company will become more focused on growing the bottom line, on looking at how to make money as opposed to envisioning what things will look like five years from now. [The approach] will be more short-term but more practical.”
Case, who co-founded America Online Inc. in the mid-1980s, said Sunday that he will resign as chairman in May, but that he will retain a seat on the board. Case orchestrated AOLs $112 billion merger with Time Warner Inc. in January, 2001, but the merger did not progress as participants had hoped.
Cases willingness to step aside is a positive move for the company because it takes a potentially contentious discussion off the table. While his departure likely signals a growing emphasis on content over delivery, the company is expected to continue providing unchanged Internet access services.
Despite AOLs early successes in the residential Internet access market, it had not made inroads in the enterprise market. “AOL enterprise e-mail was such a good enterprise tool, even AOL didnt want to use it” Gaw said.
With or without Case at the helm, AOL Time Warner is expected to move more aggressively into broadband for the small and mid-sized business market. “AOL recently has been undergoing a lot of soul-searching and refocusing. Theyre looking for money where they can find it, and certainly small and medium-sized businesses have potential,” Gaw said. “A lot of AOL customers have been kind of anxious because they want to move to broadband, and they wonder if AOL is going to be there with them. I would say be patient. AOL is placing renewed emphasis on broadband.”
In 2001, AOL, along with countless other online companies, was riding high on the dot-com euphoria that defined much of the late-1990s. Record-breaking investment funding and skyrocketing market capitalizations were but two contributors to an atmosphere of almost limitless possibilities. That atmosphere caused many to not only dream beyond their limits, but to expect others to accept those same dreams.
In 2000, Case convinced Jerry Levin, Time Warner CEO, to sell. But as the dot-com era screeched to a stop, AOL was hit hard. Since January of 2001, the combined company has seen its share price plummet from the mid-$50s to a hovering pattern just above $10.
Isaacson, who will leave the company before the summer, will become president and CEO of the Aspen Institute.