Breaking from Netscape's technology roots, AOL Time Warner this week moved the browser development group out from under the Netscape division and into the AOL Technology wing, sources inside the company told CNET News.com.
In a separate move, sources said AOL Time Warner is close to announcing a series of deals aimed at transforming Netscape.com into a content hub, offering an online hub for entertainment and editorial content, such as Time magazine.
Netscape.com "will be a hub for Time Warner content. It's been touted around internally," said a source in Netscape who requested anonymity.
Netscape executives are also considering renaming the Web site once it inherits AOL Time Warner's content, but they have not decided on a new name, according to one source close to the company. Just a few months ago, Netscape dropped "Netcenter" from its name; now it simply calls the Web site "Netscape."
The reorganization comes as AOL Time Warner is looking at all of its business units in the wake of the merger and plans widespread layoffs, particularly in its Time Warner online and entertainment divisions, according to sources. About 2,000 of the company's 85,000 employees received pink slips Tuesday, including 100 staffers in the New Line Cinema film studio, according to one source.
AOL Time Warner and Netscape declined to comment on the developments.
Company executives are expected to update analysts Jan. 31 on predicted benefits from the merger, which are anticipated to produce $1 billion in new earnings in 2001, excluding certain charges. With the downturn in Internet advertising, much of that is expected to come from cost-cutting measures and layoffs rather than growth.
The Netscape shakeup sheds substantial light on the future of the Web pioneer. The company has largely remained in America Online's shadow since being acquired by the online giant in 1999, watching as Microsoft's Internet Explorer has chipped away its market lead in Web browsers.
One manifestation of Netscape's identity crisis was its recent incarnation as a site catering to small businesses. In September, the division launched Netbusiness, a Web site for entrepreneurs that offered online yellow page listings, a network of "virtual name tags," job search databases, and human resources tips, to name a few.
The browser reorganization is the second major shakeup for the troubled division since AOL completed its merger with Time Warner. Last week, AOL Time Warner announced it would replace Netscape President Jim Martin with AOL veteran Jim Bankoff.
Bankoff, however, inherits a far narrower bailiwick than his predecessor commanded. As Netscape president, Bankoff will primarily be concerned with the Netscape.com portal and its Netbusiness initiative. Martin was charged with client development as well as the portal.
AOL Time Warner did not publicly disclose the removal of the client organization from Netscape.com to AOL Technology. That aspect of the reorganization was announced internally, and Netscape employees applauded the move.
Netscape engineers are relieved to be working under a technology group rather than a Web group, according to one Netscape employee working on the browser. The staffer cited the different release cycles Web groups follow and the inherent differences between media and technical employees.
Netscape's client organization will report to Marty Fisher, senior vice president for client development, who reports to Ray Oglethorpe, previously president of AOL Technologies and now president of America Online.
Pathfinder, Part II?
The content deals, which could come as soon as this week, will attempt to settle another nagging problem for the newly forged media titan: what to do with Time Warner's offline properties on the Web.
"It almost sounds like Pathfinder part two," said Patrick Keane, an analyst at Jupiter Media Metrix, referring to an earlier failed attempt by Time Warner to package all of its print content under a single Web umbrella. That site, launched in 1994, was eventually shuttered, and the online divisions were reverted to their respective magazines.
As part of the effort, AOL Time Warner plans to place all of its Web properties under a central technology network, the sources said. This comes as no surprise, given America Online's history of absorbing the technology infrastructure after its acquisitions of businesses including instant messaging company ICQ and Netscape.
Even before the AOL Time Warner merger closed, the company tipped off some of its plans for Netscape.
The site already features reports from CNN.com on its home page under a deal that followed closely on AOL's proposal to buy Time Warner last year.
Then-AOL President Bob Pittman first discussed turning Netscape into a content hub last February, saying it could become a "platform for all of Time Warner's products."
Now AOL Time Warner is preparing to do just that, according to sources, who said Netscape will inherit the task of showcasing the media titan's online editorial content from sources such as Time, Entertainment Weekly and People, as well as from Warner Bros. Online.
Despite its emphasis on AOL Time Warner properties, Netscape will continue its content agreements with other providers, including CBS MarketWatch, CBS SportsLine, Oxygen and the Weather Channel, the source added.
Existing Web distribution deals with other Web companies could make for some notable omissions, however. According to one source within Netscape, Time Inc.'s Sports Illustrated may not be featured on the site because of a previous relationship with CBS SportsLine.
Still, repositioning content under Netscape could offer some advantages. The company remains one of the best-known brands on the Internet, given its early role in developing Web browsers. Netscape.com generated an estimated $56 million in advertising revenue during December 2000, ranking third behind Microsoft and Yahoo, according to a study released this week by online ad measurement company AdRelevance.
There may be more of a benefit in sticking with the Netscape brand than in creating a new one from scratch, Jupiter's Keane said.
"I think (AOL Time Warner) has brands that it's willing to experiment with, which it's more willing to bastardize than the pristine AOL brand," he said.
News.com's Wylie Wong contributed to this report.