Daily News from New York, New York • 74

DOW JONES NASDAQ 7,286.27 1,114.11 776.76 ins oDDKsssooire, LPras I DILLON By THOMAS M. De FRANK and NANCY DAILY NEWS STAFF WRITERS Congress Democratic leadership called for the ouster of Securities and Exchange Commission chairman Harvey Pitt yesterday, arguing the former corporate lawyer is trying to undermine the power of a new accounting oversight board. man Alan Greenspan. Bush sources said Pitt appears to be secure in his job for now but that his long-term prospects may be iffy as he's become the poster child for Bush's cozy ties to business. "He sure is making enough mistakes to leave himself awfully exposed out there," a well-.

placed Bush adviser said. "His future might have to be addressed sometime down the road afterthe elections." A Bush source called Pitt "a competent guy who's not much of a regulator, but whose biggest problem is he's just politically tone deaf." The accounting oversight board was created by the Sar-banes-Oxley Act, a recently passed law intended to reform corporate accounting and governance. "If a chairman of the SEC was influenced by the accounting industry in the selection of members for this important new panel, it would be difficult if not impossible for that individual to have the public's trust," said Consumers Union spokesman David Butler. industries he is regulating to in- fluence his judgment and actions in ways that are improper or unethical." Before his appointment to the SEC last year, Pitt was a private securities lawyer whose clients included the four largest accounting firms and brokerage giant Merrill Lynch. Swiping back, SEC spokeswoman Christi Harlan denied any selections for members of the accounting board have been made or reversed.

"The only pressure being exerted on the commission is in correspondence from Democratic leaders," she said. Pitt has until Oct. 28 to appoint five members to the accounting oversight board in consultation with Treasury Secretary Paul O'Neill and Fed chair I. if! In a letter to President Bush, Senate Majority Leader Tom Daschle of South Dakota and House Minority Leader Dick Gephardt of Missouri blasted Pitt for reportedly revoking at the last minute his support for making John Biggs head of the new board. Biggs, chairman of the teachers pension fund TIAA-CREF, is considered a tough reformer.

His candidacy for the new Public Company Accounting Oversight Board is opposed by accounting industry insiders. "At best, chairman Pitt's repeated insensitivity suggests an arrogant indifference to the appearance of conflicts of interest," Daschle and Gephardt wrote in their letter. "At worst, chairman Pitt has allowed associations with past clients and the Columbus I SEC chairman Harvey Pitt's accused of trying to cut power of accounting oversight board. Circle deal cooking AOL profits to plunge, Merrill analyst warns II 1 1 By ERIC HERMAN DAILY NEWS BUSINESS WRITER Calif ornians may soon own a piece of Columbus Circle. The California Public Employees' Retirement System the largest U.S.

pension fund is in talks to buy a stake in The Related Companies' AOL Time Warner Center, the 2.1 million-square-foot complex rising at Columbus Circle. "We have been in talks with Related Companies about this property," said Calpers spokesman Brad Pacheco. Related declined comment. The twin-spired, 54-story building will serve as AOL Time Warner's corporate headquarters and will have 191 luxury condos, a hotel, retail mall, and new facility for Jazz at Lincoln Center. Related CEO Steve Ross teamed with William Mack's Apollo Real Estate Advisors to build the facility.

It is to be completed in late 2003 or early '04. The firms funded the $1.7 billion project largely by taking out a $1.3 billion construction loan. AOL agreed to buy 860,000 square feet of office and studio space. Its execs say the company plans to occupy all of it. But the building has an additional 318,000 square feet of unleased office space, plus 364,000 square feet retail, which is mostly leased.

Calpers would buy a 50 stake in those portions of the building from Related, according to Bloomberg News. A price was not immediately disclosed. AOL agreed to pay $350 million to $450 million for full ownership of its space. While retailers like Joseph Abboud and Hugo Boss have gobbled up much of the mall, the condos have sold less briskly. also be forced to pay cable companies steep fees to gain access to their systems, a "You have to assume the cable guys will take a big chunk," said Tom media analyst at Sanford Bernstein.

With the subscription busi- ness threatened, the pressure i is on AOL to develop premium i services, such as a music subscription service, that would command higher fees from customers, Reif said. The warning about AOL's subscribers is the latest in a nonstop flood of bad news for AOL Time Warner. Dragged down by its lumbering AOL division, the media giant's stock has sunk and its chairman, Steve Case, is on the ropes. The company also is the subject of a Justice Department probe into AOL's accounting practices. Yesterday, shares rose 7 cents to $10.74, down from a recent high of $38.25 last No- vember.

By PHYLLIS FURMAN DAILY NEWS BUSINESS WRITER AOL Time Warner's woes keep adding up. The floundering media giant that's seen ads evaporate from its American Online division, could now face a steep decline in profits from its 35 million AOL subscribers, according to a report issued yesterday. Profits from AOL subscriptions could fall 72 to $235 million over the next two years as AOL's customers switch from dial-up Internet connections to broadband service, or AOL offered over high-speed connections, said Merrill Lynch media analyst Jessica Reif. "Our concern is that as AOL advertising hits bottom and begins to recover, AOL's subscription revenues may be hitting a peak of their own," Reif said. Converting subscribers to broadband service could hurt AOL in two ways.

The company will face fierce price pressure from rivals, and it will few. ROBERT ROSAMIUO DAILY NEWS California Public Employees pension fund is in talks to buy 50 stake in Columbus Circle complex, housing AOL Time Warner HQ..