New AOL Chief Preaches Discipline

By Alan Sipress
Washington Post Staff Writer
Wednesday, November 22, 2006

Randy Falco, who was named AOL's chairman and chief executive in an unexpected shuffle atop the company last week, said yesterday that he plans to bring more discipline to operations but does not foresee layoffs beyond those that recently cost about 1,000 jobs at the Dulles headquarters.

"I think it's too early for us to say with any certainty in terms of future layoffs. I don't think I see any more layoffs more than have already occurred," said Falco, former president of the NBC Universal television group, in an interview from New York.

He said it was still premature to detail his strategy for AOL. Next week, Falco is scheduled to make his initial trip to Dulles, where he said he would immediately begin meeting with AOL's advertising sales staff in an effort to consolidate the company's shift from a subscription service to a free one supported by online ads. He said he would be turning his attention to better framing the company's strategy "so people understand it internally and externally."

After less than a week on the job, Falco yesterday made his first public act, naming Ron Grant, senior vice president of operations at AOL's parent company, Time Warner, as his new president and chief operating officer. Grant had been AOL's senior vice president for business development before moving to Time Warner, where, company executives said, he played a central role in crafting AOL's new advertising approach.

Falco succeeds former chief executive Jonathan F. Miller, who oversaw that change in AOL's business model, which was announced in August. Company executives have said the move is already showing signs of success, pointing to a 46 percent jump in ad revenue for the third quarter over a year ago.

"He deserves an awful lot of credit for the turnaround at AOL," Falco said. "There's still a lot that has to be done."

Sources close to the situation have said Miller was fired by Time Warner once he fulfilled his role in charting a new course for AOL. They said that the parent company had apparently been looking for someone stronger in daily operations to run the revamped enterprise and that Falco, with 31 years of experience at NBC, fit the bill.

Falco said he was not privy to the reasons for Miller's abrupt dismissal. But Falco continued, "Having more rigor around the business and operating expertise will be important." At the same time, he said the company's leadership must continue to be creative because AOL's business remains dynamic.

A former head of NBC's advertising, Falco said he would be tapping his "longstanding relations" with people in the ad business to generate more revenue for his new company. He said that the marketplace had already demonstrated that advertising was shifting from television to the Internet -- a change he witnessed up close at NBC -- and that AOL must now capitalize on that opportunity.

"It's up to us to find what our entitlement is in that space," he said.

On the user side, Falco said he would concentrate on increasing the engagement that people have with AOL and the amount of time they spend on the site. This turns on a variety of factors, including the availability of videos.

He said television is ceding ever more ground to the Internet as the place where people go to see video, but he drew a distinction between the types of video that succeed in those two media.

More than two-thirds of the videos available on the Internet are created by users, and these tend to be much shorter than programming on television. "There's a place for traditional video . . . but not for a 30-minute sitcom," he predicted.

Falco said he chose Grant as AOL's president because of his extensive background in Internet business, especially at AOL. "He and I hit it off instantaneously when we first met," Falco added.

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