Media Week

AOL's $350bn merger with Time Warner in 2000 was a defining moment of the dotcom boom. The image of Steve Case, chief executive of America Online, embracing the chairman and chief executive of Time Warner, Gerald Levin, hit the news headlines of every TV bulletin in the Western world.

Roll forward almost a decade and things have changed exponentially, and not as predicted. The promised new distribution channels, cross-promotional initiatives and joint content deals never materialised and the two entities found it much more difficult to work together than anticipated, culminating in May's decision to separate AOL as an independent company concentrating on online services, while Time Warner focuses on cable and media.

AOL has had a turbulent 18 months and the man entrusted with knocking the one-time dotcom darling back into shape is Google's former head of US ad sales, Tim Armstrong, who joined AOL in March and has given his first UK interview to Media Week.

After Armstrong's three-month review, the Platform-A initiative, which brought ad sales, ad networks and ad technologies under one umbrella, has been canned and now goes under the AOL Advertising moniker.

Chief executive Randy Falco and European chief executive Dana Dunne have left, and head of overseas operations Brendan Condon has gone back to the US. The Bebo social network, acquired for $850m last year, has 12 months to prove itself or it will probably be offloaded. And Armstrong is renewing AOL's focus on content, vowing to double its UK properties to 200 within 18 months.

The company desperately needs a coherent identity and management unit. It needs a clear strategy and heightened focus on customer service to make it easy to do business with and give agencies a viable alternative to Microsoft, Yahoo and Google. Armstrong is clearly a smart operator and single-minded in his approach, but he has a tough challenge on his hands to restore AOL's mojo in such a fast-moving, dynamic and demanding media space.

Running a TV company is not an easy job. That's why ITV is finding it difficult to replace Michael Grade and why it's hard to assess the performance of departing Channel 4 chief executive Andy Duncan.

Duncan had some successes in his five-and-a-half years at the helm. With 4oD, C4 was the first major broadcaster to launch a fully fledged video-on-demand service. In 2005, it was the first UK operator to simultaneously broadcast on TV and PC.

He also launched digital channels More4 and 4Music, extended E4 onto Freeview and turned Film4 from a niche pay-TV channel into a free-to-air proposition that makes much more money than it did previously. C4 says audience share has gone from 10% in 2004 to 12% in 2009 and that ad share under Duncan's tenure is up from 10% to 25%.

On the downside, last year's 4Digital radio fiasco won't figure in the list of Duncan's achievements, nor will his response to the Shilpa Shetty/Celebrity Big Brother racism row in 2007. Unfortunately, the overriding feeling is that when it came to the "big stuff", Duncan failed to push the ball over the line.

There is still significant doubt about C4's long-term future. Duncan bet the house on securing alternative funding - although C4 denies he ever asked for a share of the TV licence fee - but ultimately failed. His prolonged public pronouncements about C4's £150m funding gap that had to be filled from external sources positioned the broadcaster as a weakling not in charge of its own destiny.

This year, Duncan failed to secure a partnership deal with BBC Worldwide - the last chance for him to land the big one and leave a positive legacy.

As stated, none of these are easy challenges. But that's why senior TV executives get paid bumper salaries: to address complex and difficult problems and find solutions that benefit their organisations.

One of Duncan's first acts when he joined C4 in 2004 was to scupper a merger with rival broadcaster Five. It would be ironic if one of the by-products of his leaving was the reopening of that possibility in 2010.

Five is a most unusual TV company. In the UK, it is the runt of the free-to-air broadcasting litter, struggling manfully to compete with its bigger and more glamorous rivals ITV and Channel 4.

However, Five's parent company - RTL Group - is the biggest broadcaster in Europe, so the UK minnow has a very powerful parent that enables it to stay in the game and, if it gets its offer right, punch above its weight.

But Five's fortunes have not been good in recent times. Media agencies have targeted it mercilessly this year and the broadcaster's revenue is set to fall a shocking 25% in 2009, 9% more than the overall TV market. Feisty chief executive Dawn Airey, profiled on page 12 of this issue, puts this down to Five losing its mojo and, basically, being too expensive.

She has used the 11 months since she rejoined Five to rectify pricing, strengthen her executive team and put the fun back into the operation - the latest fruits of which were revealed in last week's promising autumn schedule launch. Five is also about to win the Discovery third-party sales account from Sky.

Running parallel, Five has been talking to all and sundry about "all options of consolidation". Talks with C4 reached a particularly advanced stage, but foundered principally because C4 simply didn't want the merger to happen. But they could yet resume once C4 has a new chief executive and chairman in place.

RTL's chief executive Gerhard Zeiler recently told the Edinburgh TV Festival that costs in the TV industry had inflated massively and that everyone had to look at running costs, production and distribution. Five is offering itself as a deal partner through which such synergies and savings could be achieved.

If Five has had its "turn" this year, the feeling is that TV traders may target Sky in 2010 and a Big Brother-less C4 in 2011. With a fair wind and if new programming developments live up to expectations, Five could finally be in a position to ink a deal that will deliver some value back to its supportive shareholder.

Last week, Sony announced it is to roll out 3D technology to its TVs, laptops, DVD players and PlayStations by the end of next year. And Sky is also launching the UK's first 3D TV channel in 2010, following the achievement of a tipping point in take-up of its HD TV offerings.

This week's feature analyses whether 3D TV is about to become the next big thing in television and what we can learn from the HD experience from an advertising and broadcasting point of view.

Sky News is soon to become the broadcaster's 34th HD channel and there are now 1.31 million Sky+ set-top boxes capable of serving HD in homes throughout the UK, although there are actually nine million HD-ready TVs. Virgin also has an HD service through its V+ HD box and so does the BBC and ITV via Freesat.

Current 3D technology requires viewers to don special glasses, which I can't help feeling will hold back universal appeal of 3D viewing after the novelty has worn off. But lenticular screens that don't involve glasses-wearing are being developed and could make the new format fly.

Sadly, when Sky put its HD offering together it "forgot" about advertising and any HD ads so far have had to be attached to the broadcast content stream, because the stream that sends ad content isn't HD-enabled. So an ad campaign such as the Ford Mondeo activity that won one of Thinkbox/Media Week's TV Planning Awards last year was a hybrid affair by necessity.

It will take an investment of a few hundred thousand pounds to make the ad stream HD-compliant and I understand moves are afoot at Osterley to make this happen. In terms of 3D, there will be no oversights this time and 3D ad serving is very much built in to Sky's 2010 launch from the start.

Eighteen months ago, everyone was sceptical about whether HD would take off - but it is now becoming ubiquitous. If lenticular sets remove the need for silly glasses, I can see exciting 3D possibilities ahead for broadcasters, advertisers and viewers starting at the end of next year.

The outdoor advertising sector is unique. Unlike other media, it is not surrounded by content to hook the consumer in. The "medium" is the environment where the poster sits, such as the side of a busy road, a Tube station or railway platform.