In a report in the Washington Post, Wayne Pace, chief financial officer of AOL Time Warner, says that managers at America Online have been given an order to engage in "zero-based budgeting".
The 18,000-strong workforce is also likely to face cuts. In the article, Pace said: "There is going to be a focus on costs from the bottom up."
America Online is looking at at 2003 as a transitional year for the business. It is shifting its revenue base away from advertising, which has not proved as lucrative as internet companies once hoped, to offering users more premium services.
A shift in marketing is needed as America Online faces saturation point in the US market. It has three times as many subscribers as the next largest ISP, which is MSN. However, it has to continue marketing to replace the numerous subscribers who cancel the service each year.
It was revealed yesterday that AOL Time Warner is set to record a one-off charge of $10bn when it reveals its annual results on January 29. This relates to troubles at America Online.
America Online has spent heavily promoting its internet services in the past, through advertising and the distribution of free CDs, in a marketing ploy that has drawn the ire of consumers around the world.
It has even spawned a protest movement, starting in the United States, with a group encouraging members of the public to send the AOL CDs back. The group hopes it can return 1m free CDs to America Online.
If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the .