Consensus-Building Skills Help Parsons Land Top Job

On the morning after AOL Time Warner Inc. completed its $99-billion merger in January, the freshly appointed co-chief operating officers were asked how they’d slept the night before.

Robert W. Pittman replied energetically that he’d barely slept a wink, working late to close the deal and still running high on adrenaline.

Richard D. Parsons, after a beat, responded, “I slept like a log.”

A dry wit and quiet confidence are just two traits that factored into the selection of Parsons on Wednesday to run the world’s largest media conglomerate.

Though many viewed the dynamic Pittman as the most likely heir apparent to Chief Executive Gerald M. Levin, Parsons’ consensus-building skills, self-deprecating humor, steady style and political savvy helped him nab the top spot.

Levin’s endorsement didn’t hurt, either.

“I’ve been working on succession with the board for a year, and I’m the one who persuaded everyone that he’s the one for the job,” Levin said.

His plans to retire in May stunned the media industry, coming only two years after he engineered the landmark merger with the largest Internet service.

Parsons left Dime Savings Bank in New York in 1994 when Levin picked him to become company president. Parsons has since become Levin’s confidant and go-to guy.

Some company and industry executives suggest Parsons may be a better choice than Levin to lead AOL Time Warner. Many say what the company needs now is a motivating and uniting force such as Parsons, who can pull the disparate parts of the company toward a single goal to ride out the recession and wring benefits from the merger.

“This is a company that needs to be tuned, not rebuilt, and Dick is the perfect guy for that,” said Leo Hindery, head of the Yankees Net cable channel who, as the former president of AT&T; Corp.’s cable division had countless negotiations with Parsons.

“Dick is big and physically imposing, making him a scary cuss. But he has an unbelievable code of honor that people trust. He can kick you from one end of the room to another, but he’s fair, he doesn’t leave you bloody and in the end you still love him. He’s the best of the best.”

People within AOL Time Warner are ecstatic with his appointment.

“There are only two things people say about Parsons: ‘I don’t know him, or I like him,”’ said Fred Dressler, executive vice president of Time Warner Cable. “But what gets lost is how smart he is. He has handled all the major negotiations at the company--and anything messy.”

As one of the highest-ranking blacks in corporate America, Parsons also serves as an icon of diversity.

“Dick’s mere presence at the company has demanded diversity from people,” said Sylvia Rhone, CEO of Elektra Entertainment Group, a division of Warner Music. “AOL Time Warner will become a model for diversity in corporate America.”

Parsons’ style will be much different from Levin’s. Levin is a cerebral visionary, and his strategic convictions drove Time Warner deep into the cable business against Wall Street’s wishes as he contemplated the interactive frontier before it was popularized. But he also is known to be calculating, with an intellect that executives said sometimes made it difficult to deal with people or make decisions.

By contrast, Parsons is more prone to bearhugs and looking at people in the eye to deliver bad news.

“Dick gets into a room and makes things happen,” said one Time Warner executive. “Jerry sometimes didn’t even go into the room because he was up on Mount Olympus.”

Parsons is decidedly laid back and confident with no need to show off his intelligence or flex his power.

“Jerry was a 24-7 guy, a workaholic who knew everything going on in the company,” said Robert Daly, who ran Warner Bros., AOL Time Warner’s movie and television studio, with Terry Semel for nearly two decades before they jointly resigned two years ago. “Dick’s a hard worker, he’s not a workaholic.”

That’s not to say that Parsons doesn’t roll up his sleeves, especially when ironing out battles between divisions. Parsons recently stepped in to facilitate a matter involving the economic benefits of DVD patents between Warner Home Video and Warner Music.

“We talked it through and worked out a fair compromise,” said Warner Bros. Chairman Barry Meyer. “You get an overriding feeling from Dick that he’s always going to do what’s fair.”

A native of Brooklyn, N.Y., Parsons, 53, spent his college years partying at the University of Hawaii before graduating first in his class at Albany Law School. He later joined the staff of then-New York Gov. Nelson Rockefeller, who became a mentor. A Republican who worked in the Ford White House, Parsons remains active in New York politics, serving as an advisor to incoming Mayor Michael Bloomberg, co-chairman of a presidential task force to reform Social Security and chairman of the Apollo Theatre Foundation.

Parsons’ history with Time Warner dates back to the 1980s, when he was on the board of the cable firm that was the foundation of today’s cable unit. After the merger of Time Inc. and Warner Communications in the early 1990s, Parsons moved to the new board, on which he has served ever since.

As president of Time Warner, Parsons earned a reputation as a peacemaker. He calmed warring factions that grew out of a clash between the buttoned-down Time and the entrepreneurial Warner cultures.

Parsons proved himself after the brutal 1997 slaying of Levin’s son, Jonathan, a public school teacher in New York. As Levin retreated from the job to grieve for several months, Parsons ran the company, earning the trust and respect of division heads and shareholders.

Though Parsons said the firm’s vision will remain virtually unchanged, he said the company must “understand how to be bigger players on a global basis.” Though Parsons was unable to close a proposed acquisition of EMI Group last year, sources said he did everything in his power to get the approval of European regulators, who ultimately stopped the deal.

Parsons will remain the point person on a pending bid for AT&T;’s cable unit that would double AOL Time Warner’s cable reach and will be evaluated by the phone giant’s board Saturday.

Parsons said he will be most focused on personnel.

“We have to make sure the right people are in the right jobs and that they are empowered and inspired.”

And his greatest challenge might be keeping AOL Time Warner from losing its command position in a half-dozen businesses. Before a recent retooling, CNN was fading in the ratings in competition against newcomers such as Fox News Channel, while TBS and TNT have been challenged at the top of the cable ratings chart by an energized Lifetime.

The company will also have to invest heavily to maintain its dominance in cable distribution. Time Warner could lose to smaller Comcast or Cox in the bidding for industry leader AT&T; Broadband, which could damage the company’s standings in the high-speed wars. In that contest, AOL is facing off against Microsoft’s MSN for cable partners that will carry those services over their lines.

“Jerry’s legacy is he left a company first or second in nearly every segment of the media business,” said Hindery. “The challenge for Dick is not to lose strength in any one of these categories.”

Parsons’ diplomatic skills came in handy during the AOL Time Warner merger, which endured a year of regulatory review and fierce opposition from rivals.

During a hearing before the Federal Communications Commission, Parsons’ style stood in stark contrast to some of the more brash AOL executives, who occasionally irritated then-Chairman William Kennard by interrupting him, said Blair Levin, Kennard’s former chief of staff.

“Parsons came in after to clean up,” said Blair Levin, who is not related to Gerald Levin.

And he shrugged off commentary after the merger closed Jan. 11 that noted that Pittman had won control of the company’s star performing divisions, including the Internet and cable units.

Analysts said Parsons was being marginalized and predicted he would leave the firm to join the new Bush administration or fade away after Levin stepped down.

But Parsons took the speculation in stride, joking that it was Pittman who got control of “all the divisions that make money.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Richard Parsons

Age: 53

Title: Chief Executive Officer, AOL Time Warner

Responsibilities: Takes over the helm of AOL Time Warner from the retiring Gerald Levin. Will oversee the entire company as it copes with the aftereffects of the complicated merger that formed the world’s largest media and entertainment concern.

*

Robert Pittman

Age: 47

Title: Chief Operating Officer, AOL Time Warner

Responsibilities: Will oversee subscription businesses, including cable systems, magazine publishing and cable and broadcast television. Also assumes Parsons’ previous responsibilities over the content businesses, including the Warner Music and Warner Brothers Studios operations.

*

AOL Time Warner Businesses:

(a partial listing)

Interactive Services: America Online, the nation’s largest Internet services provider.

Networks: TBS Superstation, Turner Network Television, CNN, HBO, Cinemax, WB Television, Kids WB.

Publishing: Time, Sports Illustrated, People, Fortune, Money, Entertainment Weekly.

Film: Warner Brothers Studios, New Line Cinema,

Music: Atlantic, Elektra and Warner Brothers Records labels.

Cable systems: Time Warner Cable, the second largest cable system operator in the nation.

Source: AOL Time Warner