• by June 8, 2007

By the end of this year, Time Warner should know whether its business model for AOL has succeeded, Chairman and CEO Dick Parsons told the Merrill Lynch US Media Conference yesterday in London.

"I think we're going to be in the place to make the call on AOL," said Parsons. "The issue is have we found a path ... or approach that can result in growth that can be sustained over time. I think we're in the right area. We're making all the right moves. We still have some execution issues before us, but we'd like to see AOL so that people say, 'They found their place. This can grow and it will be around for a while.'"

For now, at least, Parsons said Time Warner has no plans to split AOL's old Internet access business from its new ad-focused content business, because "keeping the business together is more effective for moving into the online advertising game.

"Most of the profitability from AOL still comes from the access business," he noted, "and most of the use that gets monetized from advertising still comes from the old AOL subscriber base."

Turning to Time Warner's Internet properties tied into cable networks, Parsons touted Cartoon Network--which has a "lot going on"--and CNN.com, "the largest news site online," with 26-27 million unique users monthly. "I'm going to say something I shouldn't say," he added. "I worry more about CNN now than I do about CNN.com."

On the other hand, TBS and TNT don't "lend themselves to online" in their present incarnations. That should change, however, once the two networks transition from "rerun networks" to original programming destinations, according to Parsons.

As for Time Warner's print properties, Parsons said that in addition to turning around AOL, another of his goals before his tenure ends in the "next year or two" is to be "on the road to digital transition in publishing."

The trend is already apparent with magazines--where he said that last year, for the first time, "growth in online ad revenues offset the loss in print." He added that "People.com is now the second-biggest celebrity site on the Web, with the average person visiting 71 pages"--way above what he said is the industry average of 8 to 10 pages. And the Web site for Sports Illustrated's swimsuit issue attracted 51 million unique users.