AOL on the hunt for new CEO

The move comes as no surprise. Former AOL CEO Barry Schuler stepped down from the position in April. But it raises questions about the future of Robert Pittman, AOL Time Warner's chief operating officer and the interim head of AOL. Pittman had been charged with fixing the division. As previously reported, sources in the company speculate that Pittman will not return to his duties as COO once he completes his stint at AOL.

AOL this year has taken a beating financially due to the online advertising collapse and has dragged AOL Time Warner's stock to an all-time low. Advertising and commerce revenue in the first quarter of 2002 plummeted 31 percent from the same period a year earlier, sparking a series of executive and strategic changes.

Pittman, who ran AOL prior to its merger with Time Warner, was once considered the heir apparent to AOL Time Warner's former CEO Gerald Levin. However, Pittman was passed up for the job in December when the company named Richard Parsons as Levin's successor.

AOL Time Warner spokeswoman Tricia Primrose confirmed Friday that the company has hired executive search firm Spencer Stuart to lead the initiative. However, Primrose would not elaborate on whether Pittman plans to remain with the company once his term concludes.

"Bob is and has been COO. And in that regard, nothing has changed," she said.

Primrose added that the CEO search is not limited to external candidates. Other executives inside AOL Time Warner will also be considered. Internal candidates include Time Inc. Chairman Don Logan and AOL Chief Financial Officer Michael Kelly, according to sources close to AOL Time Warner.

However, one source inside the company, speaking under the condition of anonymity, said the focus would be greater on hiring an external candidate.

An external appointment would further underscore the downfall of AOL's veteran elite. Despite the fact that AOL technically acquired Time Warner at the height of the dot-com boom, most of its core executives have either left or have been reshuffled.

Soon after Pittman returned to AOL's Dulles, Va., headquarters, he hired radio veteran Jimmy de Castro to head the flagship AOL service, and former Time Warner Cable executive Bob Sherman to run sales.

In May, AOL promoted James Bankoff as its executive vice president of operations for the interactive services division and David Gang as executive vice president of product marketing.

Although Schuler had been appointed CEO of AOL Time Warner Digital Services Development Group, sources inside the company said he has not been seen in AOL headquarters since the Pittman announcement. AOL Time Warner's Primrose said Schuler's status remains the same as the day he was appointed to his new position.

However, Primrose did not know if Schuler's new unit had a staff that reported to him.