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CNN Live At Daybreak

AOL's Bob Pittman Resigns

Aired July 19, 2002 - 06:42   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CATHERINE CALLAWAY, CNN ANCHOR: Well since the America Online Time Warner merger 18 months ago, stock in CNN's parent company has lost almost three-quarters of its value. Now a target of shareholder's anger is out of the way.

Greg Clarkin reports on the fall of Bob Pittman.

(BEGIN VIDEOTAPE)

GREG CLARKIN, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): He helped put the company together and he pushed hard and promised big things from the America Online Time Warner merger. But Bob Pittman may have pushed too hard and now he's out.

Pittman's departure was sealed at a lengthy board meeting at AOL headquarters in Northern Virginia. It's a stunning defeat for Pittman who was considered the odds on favorite to one day run the company, at least that was the speculation back in January 2000 when the deal was announced.

But since then, Gerald Levin has left as CEO and now Pittman, and those are the two executives that refused to budge from their aggressive financial goals early on and they're the two symbols of investor displeasure with the deal.

FREDERICK MORAN, ANALYST, JEFFERIES & CO.: All fingers are pointing at him. Whether that's fair and accurate is another question. But yes, they're blaming the lack of success of the merge and the decline at the AOL division on Bob Pittman.

CLARKIN: AOL Time Warner also moving to simplify its corporate structure, elevating two long-time entertainment and media executives. Don Logan becomes chairman of the Media and Communications Group overseeing the Time, Inc. publishing division, the America Online unit itself and Time Warner Cable and the book division.

Jeffrey Bewkes becomes chairman of the Entertainment and Network group overseeing Home Box Office, New Line, Warner Brothers, Turner Broadcasting properties and Warner Music Group.

(on camera): In addition to his COO duties, Pittman is also overseeing the America Online Internet unit itself. Now Pittman's departure from the company will only happen after an executive has been found to replace him at the struggling AOL unit. Greg Clarkin, CNN Financial News, Dulles, Virginia.

(END VIDEOTAPE)

CALLAWAY: It will be interesting to see how shareholders react to Pittman's departure.

Deborah Marchini joining us now from Washington.

Good morning, Deborah.

DEBORAH MARCHINI, CNN FINANCIAL NEWS CORRESPONDENT: Good morning.

And we already saw some of the reaction yesterday when the stock came under pressure in the early going on reports Mr. Pittman would be declining and also on a report in the "Washington Post" about aggressive accounting allegations at AOL.

In every other case, Catherine, it looks like Wednesday's rally may have been just a one-day aberration. We've got early indications today that there will be more selling. The futures are lower and they're even understating the amount of the damage.

After yesterday's closing bell, both Microsoft and Sun Micro issued weak earnings forecasts. Now Yesterday, the Dow Jones industrial average posted its sixth triple-digit loss in the last nine sessions. Finished down about 133 points or 1.6 percent. The Nasdaq gave up 40 points. The Standard & Poor's 500 closed below 900 for the first time in nearly five years.

A new survey points to trouble for Martha Stewart. Her loyal customers may be leaving her. As many as 20 percent of the U.S. shoppers who bought Martha Stewart's line of household and gardening products are less likely to buy them again. That's according to a telephone survey taken last weekend by a consumer research firm.

And that's the business news for this half hour, Catherine, have a good day (ph).

CALLAWAY: That's not a good thing.

MARCHINI: Not a good thing at all, not for Martha Stewart or for Martha Stewart Omnimedia, her company,...

CALLAWAY: Yes.

MARCHINI: ... which has seen its shares pummeled since the concerns about her selling ImClone stock started to weigh on it.

CALLAWAY: All right, thank you very much. See you a little bit later, Deborah, have a great day.

MARCHINI: You too.

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