Time Warner's AOL Coup

The hiring of an NBC vet as AOL's new CEO will help as the portal shifts to an ad-based strategy.
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Time Warner

(TWX)

scored a major coup in landing a seasoned veteran from NBC to head up its beleaguered Internet unit.

The company said late Wednesday that Randy Falco, chief operating officer at

General Electric's

(GE) - Get Report

marquee broadcasting operation will replace AOL Chief Executive Jonathan Miller.

Miller has led AOL for four years, steering the Internet business through its thorny relationship with its parent company in the aftermath of a merger that is now viewed as one of the most disastrous corporate missteps in history.

Falco takes the reins as AOL is shifting its business from a subscription-based model to an advertising formula.

"Given the business model that AOL is now pursuing, this makes perfect sense because, after all, what does NBC do?" says Peter Jankovskis, a portfolio manager with Oakbrook Investments.

"It also gives AOL some added credibility, because it means that Falco must feel that they have some pretty good content to work with," he adds. "If you've been brought in to boost advertising revenue, the first thing you're going to look at is what's the value of the content there that's going to drive people to purchase ads."

Falco, a 31-year NBC veteran, was passed over for the top job at NBC Universal Television Group in favor of Jeff Zucker. Now, he faces the daunting task of drawing in users to AOL with more video content.

"A key to Time Warner's digital future, AOL is showing early success in transitioning to an advertising-focused business model, and Randy is a first-rate choice to ensure AOL realizes its promise," said Time Warner in a press release. "We thank Jon Miller for his four years of far-sighted leadership during a difficult time at AOL. We wish him well as he moves into the next phase of his career."

Once viewed as a leading Internet property, AOL has become the perennial laggard in a field that includes Internet titans like

Google

(GOOG) - Get Report

and

Yahoo!

(YHOO)

.

Despite its checkered history, AOL has made recent gains with its new strategy, and Falco will be charged with keeping up the momentum.

"They've shown some very strong growth in terms of revenue from the advertising at AOL," says Jankovskis.

Shares of Time Warner recently were up 3 cents, or 0.2%, to $20.01.