Time Warner Plans to Build AOL Subscriber Business

By Kenneth Li

AOL is planning moves this year to improve its cash-generating, but shrinking subscriber business, a top executive at parent company Time Warner Inc. said on Tuesday.

The online division of the world's largest media conglomerate has watched its once thriving dial-up Internet access business lose millions of subscribers over the past five years.

It currently has about 20.1 million U.S. subscribers, down from nearly

27 million at its high point in 2002.

But Jeffrey Bewkes, chief operating officer of Time Warner, said its AOL division planned to make improvements to its subscription business this year, particularly in attracting more customers to purchase services that include high speed Internet access through partnerships with access providers.

"Growing the subscriber base is not something we should all give up on. We haven't," Jeffrey Bewkes, chief operating officer of Time Warner told investor at a Citigroup media, entertainment and telecommunications conference in Phoenix, Arizona.

AOL currently has deals to sell its service together with broadband service through Time Warner Cable and Verizon Communications Inc.

"We're going to be working on broadband subscriptions of every kind and every level of premium service," Bewkes added.

Last year, AOL focused on transforming its business to boost its online advertising revenue by offering for free more features for which it once charged.

Although plans to bolster its free Internet properties continue, including a deal announced on Tuesday to purchase online video search company Truveo Inc., Bewkes said the two businesses complement each other.

Subscribers to AOL services provide a captive audience for ads.

"You can get a lot of benefits in the audience business if you have an appropriate subscriber business," Bewkes said.

Bewkes said AOL ranked as the second most highly visited Web property by unique visitors. But he added: "We're not second in the monetization of that."

Asked if the company considered splitting the subscription business from its "audience" or free Internet business, Bewkes said it was, "possible (but) I don't think at this point it's desirable."


AOL's purchase of Truveo, which provides them with "Visual Crawling" technology that searches the Web for video files, precedes the launch of a more robust video service this year, AOL executives said.

Truveo's technology is able to better distinguish videos on a Web site that are often missed by other software, executives said. Web crawlers automate the copying and searching of sites that process the data for search engines.

The company, which will debut In2TV, a free service offering vintage Warner Brothers television episodes over the Internet this month, also plans to begin charging for programing this year, Kevin Conroy, an AOL executive vice president told Reuters in an interview.

"2006 is the year we deliver a video search experience that is as good as what people expect with text search," Conroy said.

Copyright 2006 Reuters Limited.

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