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AOL Time Warner

New York

Revenue: $38.2 billion

Net loss: $4.9 billion

The world’s biggest media company has taken a world-class drubbing over the past year as its stock plunged, losses mounted and a steady stream of top executives were shown the door.

New CEO Richard Parsons has promised to nurse AOL back to health, simplify the conglom’s financial structure, better manage Wall Street’s expectations and improve communications between AOL TW’s various fiefdoms. His focus is more on existing businesses, and less on elusive synergies.

But AOL TW faces many challenges. The Securities & Exchange Commission and the Dept. of Justice are investigating the company’s accounting practices, and shareholders are suing. The merger — once heralded as a landmark melding of old and new media — is now regarded as one of the biggest missteps in corporate history, with America Online taking most of the blame.

The unit has seen subscriber growth slow and advertising revenue dry up, and has been slow to ink pacts with cable operators other than Time Warner to carry its high-speed service — a key to growth. AOL’s ills have driven down AOL Time Warner stock, with billion of dollars of market value lost. The decline has left investors stony-faced, and has infuriated staffers whose stock options are all but worthless.

A number of AOL TW’s other businesses like TV and publishing also were squeezed by an advertising slowdown that started last year. And the conglom, which owns the nation’s biggest cable company, suffered alongside the rest of the cable biz from the accounting scandal at cabler Adelphia Communications.

AOL TW management was blamed for sticking to aggressive growth targets the company couldn’t meet and for surprising Wall Street with previously undisclosed financial obligations — like a multibillion-dollar tab to buy out Bertelsmann’s stake in AOL Europe.

Former CEO Gerald Levin was the first high-profile casualty. He retired in April and was replaced by Time Warner’s Parsons in a sign that old media had gained the upper hand in the merged company.

AOL’s top execs were ousted and AOL TW chief operating officer Robert Pittman was let go early this year in a move to rescue the Internet service provider.

HBO’s Jeff Bewkes and Time Inc.’s Don Logan, stars of the old Time Warner empire, were named to co-positions effectively replacing Pittman as COO. This month, Jon Miller, a former exec at Barry Diller’s USA Networks, was named head of America Online.

Parsons and his new team have a tough road ahead to restore investor confidence, clean up the balance sheet, and renew America Online in an uncertain economy and volatile market.

Meantime, AOL founder Steve Case is hanging on as chairman of AOL TW but many wonder how long he’ll last if the unit doesn’t recover or the stock revive.

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