AOL Creates Interactive TV Division

AOL Time Warner Inc. said Thursday that it created a business unit to oversee all of the company’s operations in next-generation cable TV services, including video on demand and nascent services such as AOL TV.

The new unit will oversee the development of several early-stage cable services, including video on demand, which is being offered on a test basis in Columbia, S.C., through AOL’s premium cable network HBO; the addition of other Internet service providers besides AOL to Time Warner’s cable lines; and a version of AOL TV that can run over cable lines instead of phone lines, which is expected to launch later this year.

“This is a case where I want to have an integrated, coordinated response,” said Chief Executive Gerald Levin. “The development of what I’ll call a mass-market service for interactive video--that’s really what the merger is about. Rather than just rely on the interrelationship of the cable company and AOL, I want to sharpen the focus and have them reporting to me.”

The unit will be headed by Joe Collins, former head of Time Warner Cable and a company veteran. Collins, who had previously reported to co-Chief Operating Officer Bob Pittman, now will report to Levin. Collins’ deputy, Glenn Britt, will take over as head of Time Warner Cable.

Collins also is bringing James Chiddix, chief technology officer at Time Warner Cable, with him to the interactive video division. Collins said he will begin assembling the rest of his team shortly.

Using Time Warner’s vast network of 12.8 million subscribers--the second-largest in the nation--to deliver next-generation interactive services has been a stated goal of the merger between AOL and Time Warner, but those services have been slow to materialize since the merger closed at the beginning of the year.

The HBO video on demand experiment got underway in May, and so far AOL TV is available only over phone lines. Phone service is beginning to be offered on a test basis over cable lines in Maine.

AOL Time Warner shares closed at $40.05, up 35 cents, on the New York Stock Exchange.