Richard Parsons, AOL Time Warner’s incoming CEO, has already dropped a bombshell: He wants Ted Turner, the company’s estranged vice chairman, back in the fold.
“Ted is my man. I love Ted,” Mr. Parsons told Electronic Media last week. “He knows more, particularly about the television space, which is at least a good third of this company. Ted and I have always had a wonderful relationship, and I am going to be reaching out to him, too.”
“I’m sure that Ted is going to re-up as vice chair[man],” said Mr. Parsons, who takes the reins from retiring AOL Time Warner CEO Gerald Levin on May 23. “Ted wants nothing more than to have the opportunity to have input into the process.”
After last week’s announcement of Mr. Levin’s pending retirement, Mr. Parsons said he expressed his sentiment personally to Mr. Turner.
Mr. Turner has been smarting since this past spring, when, he has said, Mr. Levin relieved him of his duties supervising the Turner empire within AOL Time Warner. Mr. Turner has claimed he learned he had been fired in a press release faxed to him that named the longtime chief of The WB, Jamie Kellner, to the post of chairman and CEO of Turner Broadcasting.
Most recently, at a Nov. 27 appearance at the Western Cable Show, Mr. Turner said, “I never thought in my wildest dreams I would lose my job.” He went on to say that if he had acquired Time Warner instead of selling his Turner Broadcasting to Time Warner in 1996, “I could have fired Jerry Levin before he fired me.”
Mr. Turner, who continues as a board member ever after his contract expires this month, also has complained about the declining value of his nearly 4 percent stake in the company due to AOL Time Warner’s falling stock price in a down market.
Mr. Turner declined to discuss last week’s management change, instead only issuing a prepared statement: “I wish Jerry Levin all the best, and I am very pleased with the management team he has put in place.”
Mr. Parsons said he’s already embracing one of Mr. Turner’s philosophies in response to the company having fallen short of its initial ambitious financial targets for the year: AOL Time Warner will be taking a more understated approach to future forecasting. It is expected to deliver 5 percent to 7 percent revenue growth this year, or half its originally targeted 12 percent to 15 percent.
“Ted Turner always says, `Underpromise and overperform.’ I think Ted is a wise man,” Mr. Parsons said.
If anybody can bring Mr. Turner back into the AOL Time Warner tent, it is Mr. Parsons, observers said. “He’s the peacemaker,” said one Time Warner executive. “If anyone can convince Ted to come back, it’s Dick.”
Although Mr. Levin, his senior management and board discussed his proposed succession plan in recent months, the timing of his announcement Dec. 5 caught many off guard.
“What was a surprise was the timing,” Mr. Parsons said. “I had thought, until he told me otherwise, that Jerry was on a different course and he was probably going to, if not complete his contract, go another 12 or 18 months.”
“He’s come to a point. He said to me, “Look, Dick, you’re ready, and now I’m ready. And when Jerry makes up his mind, he doesn’t let grass grow under his feet. Once he decided for personal and family reasons, and that he had done what he set out to do, which was [to] assemble this company, he felt he had done his thing, and there are other things he wants to do, and so, let’s rock.”
Although he denies the abrupt decision to change the guard was triggered by any internal rift over AOL Time Warner’s pursuit of AT&T Broadband, there appears to a split in support nonetheless. Sources said Mr. Case and others are concerned about diluting the strong cash flow generated by the company’s cable system operations, which would occur if they were spun off and merged with AT&T cable systems in a standalone, publicly traded entity. The move also could weaken AOL Time Warner stock.
Mr. Parsons said he would not pursue the AT&T systems if he didn’t think AOL Time Warner’s proposal could win regulatory approval.
“I have basically been handling the discussions with AT&T the past year. One of the big strategic issues for us is the restructuring of our [Time Warner Entertainment] partnership and the rollout of AOL on broadband,” Mr. Parsons said.
“There’s no rift. Even though I did and still am leading the discussions with AT&T, I work for Jerry Levin, and Steve Case is obviously an important strategy voice as well. Obviously, I have kept in close touch with my bosses.”
As a result of what Mr. Parsons calls his own “inclusive style” of management, even Mr. Case will play a more active role.
“Steve is a very bright guy who knows this Internet space far better than I do. I need to get up to speed in a hurry, and one of my teachers is going to be Steve in that area so we can maximize our positioning there,” Mr. Parsons said.
However, there appears to be consensus within AOL Time Warner that cable is the best broadband platform for AOL high-speed service and Time Warner content. The company has been concentrating on the rollout of what Mr. Parsons calls “truly interactive television and the … online distribution of music.
“I think we’ve made pretty good strides. It’s not just the consolidation saves of putting two organizations together and saving some dough. There were some easy early wins, like the way in which we use all of our assets to promote our content. Now things get tough and will take more time,” Mr. Parsons said.
“We still have to work our way through this broadband restructuring of an industry. We have to figure out how to continue the evolution of the Internet as a medium for more than just people communication but to also facilitate transactions, and we have to figure out how to globalize our operations in a more aggressive way,” he said.
He dismisses speculation about the tensions within the company between the AOL and Time Warner factions, which characterize the latest management changes as giving Time Warner the upper hand.
Many insiders welcomed Mr. Parsons’ appointment with glee, using words like “trust,” “honor,” “fair,” and yes, “peacemaker” to describe their perceptions of him.
“There is no tug of war. You just watch us as we go forward. The object is to bring it all together-one company,” Mr. Parsons said.
“The single most important thing that I can do, not just now but going forward, would be to make sure the 90,000 people of this company understand our global vision strategy and the part they play in it and feel informed and empowered to fulfill their role and be rewarded.”
“You can be the smartest, most dynamic CEO in the world, but if you don’t have the team and the team doesn’t have the playbook, you’re not going to accomplish jack. So if you get that part right, you’re way down the road.”
Mr. Parsons’ sincerity and effectiveness is best evidenced in his own constructive relationship with Bob Pittman, with whom he has shared the co-chief operating officer title since the January merger. Mr. Pittman, who now becomes sole COO in charge of all company operations, was initially characterized by the press as a headstrong rival destined to succeed Mr. Levin.
“A good CEO is paid to make three or four right decisions a year, and no major job decisions. It is a strategy job. That’s why I think Bob and I can be an effective team. Bob is the world’s premier operating executive. This is a big, complex mother to run,” Mr. Parsons said.
“My job is going to be to figure the strategy out, clearly articulate what it is we want to do and where it is we want to go, let Bob do his thing with the operations and make sure we have got the right people to execute,” he said.
“We don’t want to temper Bob. We don’t want to change Bob,” Mr. Parsons said. “We want Bob to do his thing.”
In fact, Mr. Parsons, 53, shrugs off suggestions that he would have left AOL Time Warner for a key Bush administration post had he not snared the top job or had he lost it to Mr. Pittman, 47. Mr. Pittman last week insisted he covets t
he top operating job he will have when the management changes take hold next May and is fully supportive of Mr. Parsons. The two men, who will be negotiating new management contracts before May, went out of their way last week to present a unified front.
Mr. Levin last week said he actually waited to announce his retirement until he was sure Mr. Parsons and Mr. Pittman had grown closer in their working relationship. Analysts widely said the new appointments play to both men’s strengths. The trick will be learning to put their contrasting management styles to work in a comfortable and constructive way: Mr. Parsons, to whom Mr. Pittman will report, will be there to smooth any feathers Mr. Pittman ruffles.
Insiders say although Mr. Pittman will more closely scrutinize the bottom line, he may prove to be a better overseer of AOL Time Warner’s television, movies and music operations, which he will inherit from Mr. Parsons, because of his industry contacts and hands-on approach to business.
But clearly, Mr. Parsons maintains a respectful deference to Mr. Levin, the man who handpicked him for his new job and who brought him to Time Warner six years ago as a keen troubleshooter and deal-maker.
“A part of my personal commitment and obligation is to … honor and respect the role of our current CEO. This is the guy who brought me into the company and made all this possible, and he deserves maximum respect. We have to work this in a way that he feels comfortable.”