AOL Time Warner chief steps down

Bob Pittman has stepped down as chief operating officer of AOL Time Warner in a shake-up at the world’s largest media company.

The company has seen its stock dragged down by its flagging America Online division.

The announcement came after weeks of speculation that Pittman had been unhappy with pressures from senior management.

Pittman had been dispatched in April to rescue the AOL division, which has had a steep drop in advertising revenue.

AOL Time Warner stock fell yesterday after a Washington Post article detailed what it called unconventional deals to boost revenue before and after the merger that created the company.

Pittman, a veteran of the AOL side of the company, had been widely associated with lofty promises for growth that were made to investors shortly after the merger of AOL and Time Warner was announced in 2000.

The company never fulfilled those promises, and angered investors by sticking to those targets long after most observers stopped believing them.

As part of the shake-up, two top executives from the Time Warner side of the company were elevated: HBO cable TV chairman Jeff Bewkes will head the company’s entertainment and networks businesses, and Time chairman Don Logan will lead a media and communications group.

Bewkes will lead an ‘‘entertainment and networks’’ group that will comprise HBO, New Line Cinema, Turner Networks - which includes CNN - the WB network, and the Warner Bros movie studios and Warner Music.

Logan, head of the company’s highly successful magazine division, will lead a new group of media and communications businesses including America Online, Time and Time Warner Cable.

Both executives will report directly to Dick Parsons, the chief executive.

Yesterday’s Washington Post article said AOL used a number of unusual techniques to boost its revenue between July 2000 and March 2002.

The story, which was based on a lengthy review of confidential documents from AOL, said the company converted legal disputes into advertising deals, shifted revenue from one division to another, and sold adverts on behalf of eBay and booked them as its own revenue.

Because of the accounting scandals at Enron, WorldCom and others, investors have become extremely sensitive to any questions that a company may be using questionable techniques to make its results look better.