Shakeup Strengthens Time Warner Chairman’s Control of Media Giant
NEW YORK (AP) _ The surprise departure of Time Warner Inc.’s second in command seems to signal that Chairman Steven J. Ross is firmly in charge of the media- entertainment giant, despite concerns about his health, analysts said.
It also dramatizes the difficulties of sharing executive power and reflects lingering clashes stemming from the 1990 merger of Time Inc. and Warner Communications Inc.
Late Thursday, Time Warner announced that N.J. Nicholas Jr. had resigned as co-chief executive and president. He was replaced by Vice Chairman Gerald M. Levin, the company’s chief business strategist.
It was a bittersweet victory for Levin, who lost to Nicholas in the mid- 1980s in their rivalry for the Time presidency.
Securities analysts praised the selection of Levin, saying it had become clear that the plans laid out at the time of the merger to make Nicholas sole chief executive in 1994 worried some investors.
They said Levin is seen as a better long-range planner who worked hard to establish a rapport with the company’s film and music constituencies, which were added to Time’s publishing and cable TV interests in the merger.
The choice also appeared to signal that the company endorsed Ross’ view of that strategic direction.
Ross, 64, has been undergoing treatment for prostate cancer and has been away from the office most of the time since December.
″People are concerned about Ross’ condition and this clearly indicates he is dealing from a position of strength,″ said Jessica Reif, media-industry analyst at Oppenheimer & Co., a Wall Street investment firm.
Both Ross’ and Levin’s offices said they were unavailable for comment. Nicholas, reached while on a skiing vacation in Colorado with his family, also declined to comment.
In a statement released by the company, Nicholas was quoted as saying there was ″sufficient difference″ between him and the company’s board and management that ″my resignation should now enable a single and consistent view to prevail.″ He didn’t elaborate on the differences.
Time Warner board member Henry Luce III said the board asked for Nicholas’ resignation on the request of Ross and Levin. Luce said the two men cited as the top reason for their recommendation the $1 billion sale of a 12 percent stake in its entertainment division to Japan’s Toshiba Corp. and C. Itoh & Co.
Luce said Nicholas preferred a different strategic policy to reduce Time Warner’s multibillion dollar debt, favoring asset sales rather than selling a minority participation in some of the company’s businesses.
Robert Bontempo, who teaches management at the Columbia Business School in New York, said Ross and Nicholas were destined to fight for power.
″These kinds of co-executive share arrangements are inherently unstable. It sounds nice on paper but it doesn’t work in practice,″ he said.
The reported disputes also are seen as evidence of the culture clash between Time’s button-down approach and the free-wheeling style at Warner.
Former Time executives are said to resent the enormous sums their counterparts at Warner received as a result of Time’s 1989 purchase of a majority interest in Warner as a prelude to the merger of the companies.
Ross himself received about $78 million in compensation in 1990, most of it stemming from his stock holdings, making him one of the world’s wealthiest executives.
On Wall Street, investors reacted positively to the change. Time Warner stock rose $1.87 1/2 a share to $99.75 in trading on the New York Stock Exchange.