Time Warner Co-CEO Nicholas Quits
NEW YORK (AP) _ Time Warner Inc. on Thursday announced the unexpected resignation of N.J. Nicholas Jr. as co-chief executive and president in a rift over the direction of the media and entertainment giant.
Vice chairman Gerald M. Levin, a former Nicholas rival and one of the architects of the merger of Time Inc. and Warner Communications Inc., was elected by the company’s board of directors to succeed Nicholas.
Nicholas has been sharing the chief executive’s title with Chairman Steven J. Ross since a few months after the 1990 merger. Levin, a lawyer, has been the merged company’s chief business strategist.
Nicholas, who also stepped down from the company’s board, was quoted in a news release from Time Warner as saying his decision was prompted by unspecified differences between himself and the management and board.
The deal that brought Time and Warner together created one of the world’s biggest media and entertainment companies with interests in magazine and book publishing, filmed entertainment, recorded music and cable television.
Nicholas’ abrupt departure was a surprise because he was the highest- ranking executive from Time in the merged company. When the merger was announced, the plan was to make Nicholas sole chief executive in 1994 while Ross, who had led Warner Communications, would remain as chairman for another five years beyond that.
Ross is currently undergoing treatment for prostate cancer. The treatments are said to be going well, but at age 64, Ross is 12 years older than Nicholas.
Time Warner’s financial fortunes also have been improving.
It has trimmed its debt in recent months to $8.7 billion from about $11 billion. It has agreed to sell a 12 1/2 percent stake in its entertainment operations to two Japanese companies for $1 billion. It also recently posted its first quarterly profit since the merger.
People inside the company said Nicholas and Ross were simply unable to overcome basic differences over style, strategy and business philosophy, and that situation left Nicholas with little choice other than to leave.
Richard Clurman, author of the recently published book on the merger ″To the End of Time,″ said Nicholas and Ross never achieved the close working relationship first envisioned. ″It didn’t work out,″ he said.
John Reidy, media analyst for the investment firm Smith Barney Harris Upham & Co., said Nicholas is ″a superb businessman″ but there were doubts about his ability to sustain the relationships Ross built with film and recording artists that are important to Time Warner’s entertainment busuness.
Uncertainty about Ross’ health made that a more pressing concern for some investors, Reidy said. He said Levin is seen as someone who will be better able to continue Ross’ approach to business.
Levin, 52, joined Time in 1972 at its Home Box Office pay-television division and became vice chairman in July 1989 when Time bought a majority interest in Warner. The merger of the companies was completed in January 1990.
In the statement released by the company, Nicholas hinted at a top-level disagreement.
″For a company to fulfill its potential requires a clear strategic focus shared totally by its leadership,″ he was quoted as saying in the statement released after the close the financial markets in New York.
″Upon careful reflection, I have concluded that there is sufficient difference between myself on the one hand and the board and management on the other so that my resignation should now enable a single and consistent view to prevail,″ he said.
Levin’s emergence completes the resurrection of his career, one that surged in the 1970s and almost collapsed the following decade. He became a star by convincing Time officials to use satellites to transmit HBO’s signals.
Andrew Heiskell, the company’s chief executive in the 1970s, was quoted in a 1990 New Yorker magazine article as saying, ″Levin is our resident genius - there is only one at Time Inc. and he is it.″
Levin became head of Time’s video operations, but his climb stalled when he became rivals with Nicholas for the presidency of Time Inc.
In 1986, then-chairman J. Richard Munro named Nicholas president and anointed him as his heir apparent. Levin was demoted and removed from Time’s board of directors.
Levin’s comeback began in the late 1980s with his formulation of the plan that led to the merger of Time and Warner Communications.
The resignation, coming after the market close, had no impact on Time Warner, which closed at $97.87 1/2 a share, down 37 1/2 cents.