Parsons: Time Warner’s Growth Rests With Making AOL More Competitive

Sep 21, 2005  •  Post A Comment

Time Warner Chairman and CEO Richard Parsons said Monday that while he might consider spinning off a larger share of the company’s cable unit or increasing the share of its stock buyback, the media giant’s real growth opportunity rests with its America Online unit and seeing that operation grab a larger share of advertising dollars.

Speaking at a Goldman Sachs investor conference in New York, Mr. Parsons said a top priority of the company is to position AOL to take on Web titans such as Google or Yahoo! in order to grab a larger piece of the advertising pie. He added the unit has to migrate away from being solely dependent on subscription revenue toward “more of an audience-based business.” However, he said, AOL would not abandon its shrinking dial-up business altogether, since it still generates considerable cash.

Time Warner for years has seen its stock price languish, in part because of weakness at AOL. While that has led to grumbling among some investors, the howling has gotten louder in recent weeks as billionaire Carl Icahn has sought to push the company to be more aggressive in boosting shareholder value.

Specifically, Mr. Icahn wants the company to boost its stock-buyback to $20 billion from the current level of $5 billion and to spin Time Warner Cable off completely, instead of the company’s present plan to spin off 16 percent.

Mr. Parsons told investors Monday in his first public comments since the Icahn story broke that in principle Time Warner’s management agrees with Mr. Icahn, however, “When you look at what Carl is suggesting, he’s saying, ‘You’re heading in the right direction, but we would like you to get there faster and with more weight.'”

He said he sees the cable unit as an important strategic asset for the company, however he added that he might reduce the company’s interest in Time Warner Cable if it makes sense in the future.