NEW YORK – AOL Time Warner Inc. (AOL) said Monday it is considering dropping "AOL" from its name after a request from its online unit, and a media analyst said it is likely to be raised at the September board meeting.
"[AOL Time Warner CEO Richard Parsons (search)] and senior management is considering a name change as a result of the America Online request. This will be a decision that will be made in due course with the board," said company spokeswoman Mia Carbonell.
The topic will likely be discussed at the September board meeting, said Hal Vogel of Vogel Capital Management.
According to a memo obtained by Reuters, AOL unit chief executive Jonathan Miller approached Parsons over the name change in the past few days.
"Recently, I told Dick Parsons that I have concluded that AOL's brand would benefit from being removed from the corporate name, and Dick is considering this step," AOL unit chief executive Jonathan Miller said in the memo.
Heralded as an industry- transforming combination of traditional media with Internet businesses, the merger of America Online and Time Warner, which closed in 2001, has been criticized for falling short of expectations.
Once the crown jewel of the media empire, the online unit is now the target of government investigations into accounting of some of its advertising deals. AOL Time Warner shares have declined by two-thirds since the merger.
There has been speculation for more than a year at the company's New York headquarters and on Wall Street about a name change. It was heightened last January after America Online founder and chairman Steve Case (search) resigned under pressure. Case remained on the board of directors.
Case's resignation as chairman rekindled speculation that the company would spin off the online division. But talk of a spinoff quieted down and may not be raised anew for a while.
"Right now, the inclination is to fix it and not do anything at least until the end of the year," said Vogel regarding a possible spinoff of the unit. "It's one of the options they'll consider in 2004."
One source familiar with the situation, who requested anonymity, said the company was not likely to consider any spinoff while under federal investigation, or before management gets a chance to reverse losses at the unit.
In the second quarter, revenue at the online service division fell 6 percent and earnings before interest, tax, depreciation and amortization slip 9 percent. It lost 846,000 subscribers since the first quarter.
"The name change is very important ... to reflect the reality that AOL is merely a division and not the leading division," said Vogel. "The people who run that division do not run the rest of the company."
The source said the company is also considering the name change to end confusion caused by the media and investors who refer to the overall corporate entity as "AOL," instead of "AOL Time Warner. Shares rose 30 cents to $15.53 Monday on the New York Stock Exchange (search).