Time Was on His Side : As His Corporation’s Woes Fade, So Does Sniping About Levin

While it may not be as sexy a turnaround as John Travolta experienced a few years back, Time Warner Inc. Chairman Gerald Levin is suddenly hot.

A few years back, few people had a nice word to say about Levin, his management style or his company’s strategy and performance. He was forever compared unfavorably with beloved Time Warner Chairman the late Steve Ross and haunted by perpetual rumors about his impending ouster.

The paralysis of Time Warner’s stock fueled the negative sentiment and hovered like an unsettling cloud over the company.

But over the last year, Levin, who took charge in 1993, has proven once again his knack for corporate survival and his thick-as-a-rhinoceros skin by shrugging off the darts. Since the beginning of the year, Time Warner’s stock has rebounded nearly 40%, closing at $50.25 a share Thursday on the New York Stock Exchange, just shy of the $50.75 high reached last month.

“Jerry has a new lease on life,” said PaineWebber Inc. analyst Christopher Dixon, a longtime Levin supporter.

Said another investor: “There’s nothing better for a corporation’s feeling than having the stock at an all-time high when people hold a lot of options.”

The turnabout is the culmination of good news that started with the acquisition of Turner Broadcasting System Inc. last year and continued Wednesday when Time Warner reported record quarterly earnings. The company also addressed an issue that had been nagging for the last 2 1/2 years.

After protracted negotiations to split up their five-year partnership, Time Warner and US West Media Group agreed to continue the joint venture, which holds Time Warner’s Home Box Office, Warner Bros. studio and the bulk of its cable systems. Time Warner said it will find other ways to defray its $18 billion in debt.

Levin’s own stock has risen in large part because of his surprisingly comfortable partnership with Ted Turner, the vice chairman and largest Time Warner shareholder who some predicted would push his new boss out the door. Turner’s charisma and penny-pinching ways have brought a financial discipline to the company that many analysts thought was lacking.

“Ted and Jerry are a perfect match,” said Jessica Reif, a Merrill Lynch analyst. While Levin plays the dutiful day-to-day manager at Time Warner’s Rockefeller Center headquarters, Turner muses over big-picture strategy from his ranch in Montana. A flamboyant showman, Turner has the mogul status that Levin lacks.

Also working in Levin’s favor is the recent resurgence of the cable industry. The phone companies that were expected to wage a competitive war have retreated and the threat from satellite television seems to have played out. Last month’s $1-billion investment by Microsoft Corp. in Comcast Corp. was taken as a ringing endorsement for all cable stocks, helping to push Time Warner to its record high.

“He stuck to his guns through the horrendous performance of the cable industry,” Reif said. Though Reif and Dixon supported Levin’s cable vision, many analysts harshly criticized his heavy investments in cable systems at a time when they were out of favor on Wall Street.

Some Wall Street sources say timing was in Levin’s favor.

“I think he’s extremely lucky,” said one investment banker. “Cable systems came back in vogue. His heart was never in getting a [US West] deal done. . . . He lucked out.”

Before cable’s turnaround, Levin found himself at odds with some of his own top executives, who questioned the strategy of emphasizing “hardware” over entertainment content. The company’s cable stance was particularly unpopular with Warner Bros. studio chiefs Bob Daly and Terry Semel.

With competitors strengthening their content cores through acquisitions, Levin expanded Time Warner’s own empire with the purchase of Turner and its family of cable channels. That move deflected some of the criticism of Levin within the company and on Wall Street.

“All the internecine squabbles have fallen by the wayside, validating Jerry Levin’s vision for the company,” Dixon said.

Reif said the acquisition, which helped unify the company, also increased its revenue potential. She said that for the first time, the divisions of Time Warner are cooperating and interlaced--largely because of Turner, whose cable company was known for the cross-fertilization of its divisions.

At Time Warner, Turner has struck deals to buy Warner television shows and movies for his various cable channels, including TBS and TNT.

While Turner may be a chief contributor to the rebound of Time Warner’s stock, a stronger board of directors assembled over the last few years by Levin has also helped. For the first time in its history, the board in January insisted that budgets be revised to save more money.

The company’s renewed vigor allowed Seagram Co. to liquidate half its stake in Time Warner, putting to rest speculation that the beverage giant might sell its interest to a hostile party.

While Levin’s star is on the rise, just one setback in cable could cause it to flame out. Or, the volatile Turner could wake up tomorrow and decide Levin is toast if the stock takes a dive.

“Lots of things could happen,” said a source close to the company. “But I don’t see anything on the horizon.”

Levin declined to be interviewed. He made his first public appearance Wednesday since the brutal murder last month of his son Jonathan, a New York schoolteacher.

Levin, 58, told reporters at a briefing on the company’s quarterly results that the tragedy had underscored the importance of “fundamental human dignity and equality” in the company’s journalism and creative businesses.

Tarses Watch

The television community is still unsure whether Jamie Tarses, president of ABC Entertainment, is coming or going in the wake of a recent demotion and a scathing cover profile in Sunday’s New York Times magazine that infuriated her bosses in New York.

Friends of the 33-year-old executive claim she will tough it out under Stuart Bloomberg, who was brought in over her last month as chairman, despite top management’s assurances in May that she would remain their top entertainment executive.

Sources said ABC’s parent, Walt Disney Co., refused Tarses’ request to be settled out of her contract at full value of $4 million over four years and that she refused a counteroffer for 50 cents on the dollar.

Sources say the two parties are now in a standoff, with Tarses smiling at the office and waiting for Disney to buckle and pay her off, and Disney hoping she’ll quit.