Ousted AOL chief Miller could guide Yahoo strategy

NEW YORK — Given that he was ousted from the top job at a struggling AOL, Jonathan F. Miller might not seem a natural candidate to advise its Internet rival Yahoo Inc. But Miller was instrumental in transforming AOL into an advertising company, giving him expertise in a field Yahoo must master.

In his four-plus years as chairman and chief executive of Time Warner Inc.'s AOL LLC, Miller made key acquisitions, including Advertising.com for $435 million in 2004, along with a crucial decision to shed AOL's roots in dial-up Internet access and give away content once reserved for paying subscribers.

Miller, 51, could similarly offer Yahoo a strategic vision it needs to overcome its malaise. Activist investor Carl Icahn revealed Monday that Miller is a candidate for one of the two open board seats Icahn gets in a deal avoiding a battle for control of Yahoo.

"Jon understands the online medium as well as any executive I know," Ted Leonsis, one of Miller's top deputies, wrote in a 2006 blog posting just after Miller's firing. "And he helped save a company that I — and millions of users and thousands of employees — love."

Miller now is a partner at Velocity Interactive Group, a venture capital firm that focuses on digital media and communications.

He could bring Yahoo insights he developed after joining AOL "at a moment of crisis," stabilizing it and ultimately transforming it, former AOL executive John Buckley said Monday.

And perhaps Miller could even run Yahoo if pressures to oust CEO Jerry Yang continue.

AOL and Yahoo have much in common. Both have had happier times, but both are strong in graphical "display advertising" such as banner ads, a rare segment in which industry leader Google Inc. has been weak.

Miller also brings experience as an executive with Barry Diller's USA Interactive, now known as IAC/InterActiveCorp. Before becoming AOL's chairman and CEO, Miller spent two years at the helm of the unit that includes such properties as Ticketmaster, Citysearch and Match.com.

Miller joined AOL in August 2002 at its height as an Internet access provider. The company then known as America Online Inc. was peaking with 26.7 million U.S. subscribers.

But Buckley said it was already clear then that the dial-up business was running short on time, as customers began to flee to high-speed Internet services from cable and phone companies.

Miller tried to address the erosion by starting to give away news articles, music video and most other content in 2004, breaking AOL's historic "walled gardens" just as the company acquired Advertising.com and began to make it easier for advertisers to buy bigger blocks of ads across different AOL properties.

Under his tenure, AOL also bought Weblogs Inc., a collection of specialized blogs key to AOL's current strategy of targeting niche audiences, and Truveo Inc., a search engine for video.

AOL's transformation into an advertising business accelerated in August 2006 when the company decided to give away e-mail accounts and software as well.

But Miller was fired less than four months later, even as the company's quarterly ad revenue was growing 40 percent or more. He was replaced with Randy Falco, an NBC executive who Time Warner felt had more operational experience.

Since then, growth in AOL's ad revenue has shrunk, to 1 percent in the first quarter of 2008. Meanwhile, Google Inc. saw a 40 percent increase in online ad revenue, Microsoft Corp. a 39 percent jump and Yahoo 7 percent.

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