New Orleans -- AOL Time Warner Inc. co-chief operating officer Richard
Parsons denied a potential spinoff of the troubled America Online Inc. Internet
unit but acknowledged that a lot of the company's current problems -- its stock
has declined more than 40 percent since the beginning of the year -- were of its
Speculation has run rampant over the past few months as AOL's subscriber
growth has slowed considerably. Last month, AOL Time Warner included the online
unit among co-COO Bob Pittman's responsibilities.
Speaking at the National Show general session Monday morning, Parsons -- due
to become CEO of AOL Time Warner at its May 16 annual meeting -- said there were
no plans to spin off AOL.
'There is no current thinking about breaking up the company,' Parsons said.
'As [AOL Time Warner chairman] Steve Case likes to say, the premise and the
promise of the merger is still there -- it's just moving more slowly than we led
people to believe.'
'To some extent, we've hoisted ourselves by our own petard and probably [have
been] justifiably punished for having been a little bit too exuberant,' Parsons
also said, regarding the stock price.
But he added that the current initiative to drive growth at AOL, the success
of digital cable and high-speed data and the promise of new services like
video-on-demand should help AOL Time Warner, and the rest of the industry, to
turn the corner.
Comcast Corp. president Brian Roberts said growth rates in high-speed have
exceeded expectations, but the product still lacks the 'killer application' that
will drive it into more homes.
High-speed-data penetration is about 18 percent across the industry. Roberts
said the only way to increase that rate is by developing new broadband-specific
applications that give customers another reason to purchase high-speed-data
service besides speed.
'As scale grows, I hope the music industry finds a way to recreate the
excitement of Napster,' he said. 'That was great for broadband. The industry
wants to take advantage of this new Ferrari.'
Insight Communications Co. Inc. president Michael Willner said the same holds
true for new services like interactive television. While initially, VOD is being
driven by pay-per-view movies, convincing customers to use VOD and other
technologies in ways that they haven't thought of yet is the biggest
'It's easy to sell VOD,' Willner said. 'What's more difficult is selling
other types of services people aren't used to using on the TV and making them
He added that in the next 12 months, as more of these new services are rolled
out and capital-expenditure budgets decline, the cable industry may be able to
reverse its current downward trend, at least in the stock