AOL Time Warner is taking steps to dramatically refocus its
flagging Netscape subsidiary, handing responsibility for Web browser
development to another division and preparing to relaunch Netscape.com as a
venue for its top editorial content, according to sources familiar with
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
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
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
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.