Time Warner's Jeff Bewkes Lays Off AOL CEO and President–in a New York Minute
Let’s just say the firing of AOL CEO Randy Falco and President Ron Grant was not exactly expected–even if everyone thought it should happen–within the high ranks of the troubled online unit, until Time Warner (TWX) CEO Jeff Bewkes dropped the guillotine this afternoon in Manhattan.
And drop it he did, quickly lopping off the pair of executives Bewkes had installed himself. He replaced them with Tim Armstrong, Google’s head of advertising sales, a man with a much brighter resume, for what is likely to be an attempt to spin out AOL now that merger options are moribund.
“It’s a shock to everyone how sudden it was,” said one exec. “Everyone talked about when Bewkes was going to run out of patience with Randy and Ron all the time, but no one knew it was coming now, since it had taken so long.”
Grant, for example, only found out about the situation when Bewkes told him in person earlier today at AOL’s offices in lower Manhattan, said several sources. Bewkes has hardly ever been there–he has a stunning office at the Time Warner Center in midtown–although Armstrong’s office at Google is nearby.
Falco might have learned about the situation earlier, but several sources said no other top exec at AOL did until about 30 minutes ago.
The whole coup came, said several sources, from corporate, which swooped and made the moves swiftly, very quickly after signing the deal with Armstrong.
(Here is an interview I did this afternoon with Armstrong after the appointment was announced.)
AOL PR did not seem to be aware of the move until this afternoon, and neither did its three top division heads: People Networks head Joanna Shields, MediaGlow President Bill Wilson or newly hired Platform-A ad leader Greg Coleman.
Yesterday, quite by coincidence, BoomTown wrote about the continued turmoil within AOL and the unhappiness with Falco, which was long-running:
“That’s caused a lot of people inside AOL and also a wider circle at Time Warner to increasingly point the finger of blame at AOL CEO Randy Falco, wondering if and when he will suffer too.
“‘Why Randy Falco gets to keep his job is a mystery to a lot of people,’ said one top exec at another division.”
Well, it is a mystery no longer, apparently, with Bewkes putting the high-profile Armstrong in place as AOL’s CEO and chairman, although he has been casting about for new leadership for a while, according to many sources, such as former Yahoo COO Dan Rosensweig.
AOL is in the midst of laying off 10 percent of its staff of 7,000, although many feel deeper cuts are needed, especially since Bewkes has been unable to complete a deal to sell it after a lot of trying.
Interest by Yahoo (YHOO) in merging with AOL, for example, has cooled and there seem to be no true suitors on the horizon. A spinoff of the division seems to be the most likely option.
Whether that includes a strategy reset for AOL or not is unclear.
Under Falco and Grant–who were derisively given the nickname Smithers and Burns from “The Simpsons,” and also “Rondy” by some inside the division who did not like them–AOL paid $850 million for the Bebo social-networking site last year, an overpriced move that has grated on many throughout Time Warner.
Under their plan, AOL was focusing on a three-pronged strategy: social networking and communications (People Networks), content (MediaGlow) and advertising (Platform-A).
But new Platform-A head (and former Yahoo sales exec) Coleman–whose business has to drive revenue growth–cannot perform miracles in such a weak environment no matter what cool new products and offerings either People Networks head Shields or MediaGlow president Wilson create.
Armstrong certainly knows sales, as head of sales efforts at Google (GOOG), although he has never operated a business as multi-faceted as AOL, which–despite its troubles–remains huge.
More to come soon…