AOL Hopes New Chairman Can Revive Empire
AOL Hopes New Chairman Can Revive Empire
Jan. 18, 2003
NEW YORK (AP) _ By adding chairman to chief executive Dick Parsons' titles, AOL Time Warner Inc. is banking that the executive known as a consensus builder can save the merger that created a media empire _ but has left it foundering since then.
AOL Time Warner's board of directors voted unanimously Thursday to give Parsons, a Time Warner veteran, the additional title of chairman when Steve Case, the America Online co-founder, departs this May. The move also gives complete control of the company to Time Warner executives, who were pushed aside as irrelevant two years ago when America Online and Time Warner merged.
Analysts say Parsons was chosen for the top job because of his ability to juggle multiple divisions and his hands-on approach to dealing with the problems that have enraged investors, including a more than 60 percent decline in the company's stock price following the $106 billion deal.
``It's a company that needs some healing and they needed somebody who plays well with others, and Dick has shown that he does that,'' said Jonathan Gaw, a research manager at IDC Inc., a technology market research firm. ``He's a peacemaker, he's the kind of guy that brings people together and this is a company that really needs a group hug.''
Indeed, Parsons has focused on cooperation within the company, stressing the need to restore investor confidence and improve the company's balance sheet. That approach appears to be paying off. Last month, the Time Inc. and America Online divisions announced an agreement giving America Online subscribers exclusive access to some of Time's magazine content.
``It's a very healthy'' environment, Chuck Ellis, executive vice president and chief marketing officer at the Time Warner Cable division, said in an unrelated interview earlier this week. ``One in which people are reaching out to find solutions and help and support. There's a focus on common sense, rather than forced mandates.''
Parsons also successfully extricated AOL Time Warner from a complicated deal with AT&T Corp., clearing the way for an initial public offering of Time Warner's cable assets later this year. That IPO is expected to shore up the company's finances.
Wall Street reacted cautiously to the news, however. The stock fell 49 cents, or 3.2 percent, to close Friday at $14.81 on the New York Stock Exchange.
Before becoming chief executive in May, Parsons was AOL Time Warner's co-chief operating officer. He had been named president of Time Warner in 1995, after joining the board of directors in 1991. Previously, he was chairman and chief executive officer of Dime Bancorp.
``I am highly gratified that the board shares my determination to maximize AOL Time Warner's tremendous potential,'' Parsons said Thursday. ``As we address the challenges facing our company and the industries in which we operate, I will work together with the extraordinary people in this company to focus on increasing value for our customers and our shareholders.''
Parsons' ascendancy had been widely expected, although there had been some speculation that the positions of chairman and chief executive would be kept separate to ensure sufficient oversight of the company. But the company indicated that it remains confident its corporate governance measures are adequate.
The decision also places AOL Time Warner firmly in the grasp of executives from the Time Warner side of the business.
In the last year, nearly all the key architects of the merger have left, including Jerry Levin, the Time Warner chief executive who pushed for the AOL Time Warner combination. They have been replaced by a team chosen by Parsons, who, at least in the short term, appears willing to try to work out America Online's problems, rather than selling it.
Case announced his May departure on Sunday, saying that he felt his continuing presence would be a distraction as the company tries to turn around. When he leaves, the highest ranking executive from America Online will be Paul Cappuccio, the company's general counsel.
``This is the final acknowledgment that the AOL-Time Warner combination was a poorly orchestrated merger and now the entire new management team that's been put in place over last 12 months can move ahead,'' said Mark May, media analyst at Kaufman Bros. ``This has been a wholesale shift from AOL people back to Time Warner people.''
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