Interview With Top AOL Exec

DULLES, Va. Lisa Singhania writing for AP reports that barely two months on the job, America Online's new chief executive and chairman Jonathan Miller is already under intense pressure.

His company, its future glittering when it acquired Time Warner in 2001, now is widely blamed for the plunge in the price of AOL Time Warner stock, which is hovering around $11 per share. Shareholders have become increasingly unhappy as advertising revenues have declined and the government began investigating some of its accounting practices.

Miller's bosses have promised a turnaround, in part based on Miller's experience at his previous employer, USA Interactive, where he oversaw Ticketmaster.com, Expedia.com and other e-commerce operations. But there are more than a few doubts about whether America Online can ever regain its early promise.

In an interview with The Associated Press, Miller talked about the company's future and his role in it. Before the interview, his spokesman said Miller would not directly discuss the government investigation.

AP: How fairly do you feel the company is being judged?

JM: I think that what has been lost in a lot of what's talked about is that the company is still hugely profitable. That if you looked at the core business, called the narrowband (dial-up) business, before you spend money getting into broadband or fund international expansion, is still $2 billion EBITDA (earnings before interest, taxes, depreciation and amortization). It's not a dot-com number. That's a real number.

AP: The government is investigating some of the deals made by the business affairs unit at America Online. Although those transactions predate you, what are you doing to make sure the division is squeaky clean? What would you say to shareholders who are angry about the falling stock price and blame AOL for all this?

JM: We announced that we were changing the business affairs department and expanding it and putting it back into general business so there's no central function like the one that previously existed.

We've gone to great lengths to make sure the company can't run afoul of any current or future guidelines of any kind.

We've done it in terms of the organization, the authority, the publishing of policies, the direct supervision. It's a pretty significant effort.

I'd like to think (shareholders) would feel better about this company than maybe some others that probably haven't had to focus on it the way we have, and have put the controls in place that we have.

AP: A lot of people have questioned whether the 2001 merger was a good idea, and there has even been talk that AOL Time Warner might someday drop ``AOL'' from its name. How would you describe America Online's relationship with Time Warner?

JM: The relationship between AOL and other divisions of AOL Time Warner, I think, is very supportive at this time. I've been hugely impressed by the CEOs of other divisions reaching out to me and making it clear they really want to help the whole company succeed. I didn't know that that would be the case coming in, and it has been the case.

I'm focusing on products we can do across divisions that will have impact and that both sides feel good about and can deliver. Those things are always hard in big companies, but by focusing on real projects and with the good will at this time, we'll get stuff done.

How do I personally feel about the name change?

I don't really have a lot of emotion attached to that. I think that I probably like the name the way it is.

AP: The glory days were pretty exciting, and led to some excesses. Do you think the spark is going to come back?

JM: I don't know that you can get back to the kind of giddiness that probably permeated the atmosphere during certain times in late 1990s for this company and perhaps some others. But I don't think it's necessarily such a good thing to get back to.

What we want to do is energize the spirit of the place by refocusing on what is really the core, which is serving the membership base. If you serve them, the rest will take care of itself. And having that focus, and not on the stock ticker and not on what's in the press today ... that's what you want. The more we can make that the mission, other things will fall into place.

AP: Tell me about some of the areas AOL is focusing on right now. What types of changes can be expected, both in the business and in terms of what consumers will notice?

JM: We're launching AOL 8.0 in mid October, which is a really important product launch for us because it really begins to return the emphasis to the product itself, which is where most people think it belongs.

We are pushing hard on the broadband front and working on what the product wants to be.

We're pushing in our international ventures for responsibility and we're looking at what I call getting leverage in the business which goes back to one of my earlier points, retaining members: How we do that better, how we talk to them better and where we want them to go.

AP: You mentioned broadband, or high-speed, connections. Right now, just under 4 million of your 26 million domestic customers use high-speed connections. How are you going to increase those numbers?

JM: I think we have to have a position that is ultimately access-agnostic, which means that however you get to AOL — through our pipes, which we hope will be the best and continue to be the best, or someone else's such as in recently announced Comcast/ TWE deal — that you see a great value as a consumer in being an AOL subscriber.

Our job is to build enough value in the service that not only do people want to pay for it but the ... providers look at it and say I want to help market this because it's going to help get me people to sign up for these services.

AP: The overall online ad market is soft and many of the lucrative deals AOL made during the boom years are starting to expire. Is there still a place for advertising online?

JM: Look at InStyle magazine. The thing weighs a ton. People like it because it has the most ads of all the fall fashions.

People who read those magazines are looking for those ads. The key is how relevant you can make ads.

Relevant ads can serve members, relevant ads with deals can be a further benefit, relevant ads with deals that members can act on right away become commerce.

AP: So does that mean we can expect to see more things for sale via AOL?

JM: Yes. The way in which I want to do it is in ways our members will feel like they're getting special value for it being offered on AOL. Whether we are the primary merchant, so to speak, or someone else is, I want to move us to a model where it's special values only on AOL.

AP: Looking down the road, where's AOL going to be?

JM: I hope the answer is everywhere. I think that you should, and we have to, have a strategy of ubiquity — of being everywhere that people want to and can interact with the Internet.

As a consumer ... I don't want to figure out who I want in my mobile device, who I want at work and at home and in my living room. I'd like somebody who could help organize my life across all those things and say this has coherency and it's easy. So I don't have to think about it.

I think that the great opportunity AOL has is to do that for people: Resimplifying again for what is this next wave of multi-access and multi-device world as the Internet and digital content begins to really permeate our lives.