Pittman: Passed Over but Still a Key Player

Robert W. Pittman didn’t get the big title in Wednesday’s reshuffling of the AOL Time Warner executive suite. But there is no doubt he’s been handed the harder job.

Elevated from co-chief operating officer to the sole COO managing the disparate businesses within the world’s largest media conglomerate, Pittman must make bottom-line sense of AOL Time Warner.

“His job is to make the trains run on time, have the divisions work together. Synergy, growth, budget,” said Peter Kriesky of Mercer Management Consulting, which counts AOL Time Warner among its clients.

In short, Pittman will have to play the corporate tough guy while smooth and savvy Richard D. Parsons, Pittman’s former co-COO, leads AOL Time Warner as chief executive.

Barry Schuler, chairman and chief executive of America Online, agrees that Pittman has the tougher job. “He has ultimate responsibility for profits and losses.”

This isn’t the corporate seating arrangement predicted by Wall Street and the media after the merger of AOL and Time Warner was completed in January.

Pittman was featured in a Jan. 15 Business Week cover story as AOL Time Warner CEO Gerald M. Levin’s heir apparent. Parsons was relegated to a box at the end of the piece, in which he is referred to as the guy who made Levin look good.

The October Vanity Fair ranked Pittman No. 8 on its list of the top 50 media moguls. AOL Time Warner Chairman Steve Case was No. 1. Parsons didn’t make the list.

With 70% of the corporation reporting to him, Pittman appeared to have the larger empire of the two co-COOs. He also had the heftier revenue producers, with all the subscription and advertiser-supported businesses, including AOL, HBO, the magazines, WB Network and the cable systems. Even before the reshuffling, Pittman was the executive wielding the budget ax and looking for efficiencies across divisions.

The job and Pittman’s enthusiasm for the spotlight may have made him look powerful, but the combination positioned Pittman to take the fall when AOL Time Warner had to readjust its growth targets. Pittman had boasted to Wall Street that the company could deliver as much as 15% annual growth--at least $40 billion in revenue in its first year. Now the company anticipates revenue growth of only 5% to 7%.

“The company is being whacked by the advertising recession like everyone else,” said Tom Wolzien, an analyst with Sanford Bernstein. “If you can fault them, it’s because they stuck with their numbers long after the street had dropped expectations. It didn’t make any sense.”

Deflecting the notion that he was disappointed about being passed over, Pittman said, “We both got the jobs we wanted. I’ve always enjoyed operations and think I do it very well. I love to roll up my sleeves.”

Several AOL Time Warner executives applauded his appointment.

“I don’t think he is disappointed,” said Jamie Kellner, chief executive of Turner Broadcasting System, overseeing all of AOL Time Warner’s networks. “This past year, everyone has to feel that they worked a lot harder and got a lot less out of it than at any time in the last 10 years.”

Kellner said Pittman will play to his strength: his ability to instill the corporate mission in the division heads.

“Operating jobs always have certain pressures that can sound very negative. But I’ve always found Bob to be incredibly fair and very open to ideas. His instincts are quite good,” Kellner said. “This company is communicating better because of him.”

In particular, Kellner and other AOL Time Warner division heads applaud the twice-a-month CEO meetings Pittman has instituted. “When you sit down and break bread every two weeks, you get to know the others as human beings, form relationships that make it harder to say ‘no’ to each other and easier to work together,” Kellner said.

Because of those meetings, Kellner said, “on TNT and TBS, you are seeing us promoting music with [late-night] advertising inventory. Do we take a marginal ad or is the company better served by giving that inventory to Roger Ames to break the new Enya album?” saying that, because of Pittman, it’s now the latter.

“It’s a combination of insisting on and inviting” change, said Jeff Bewkes, chairman of HBO. “It takes judgment to do that right.” The pay cable channel has been increasing its investment in original programming, Bewkes said. “I had the support to do that before anyone knew if it would succeed in the midst of this merger where there has been a lot of pressure to streamline.”

The son of a Mississippi preacher, the 47-year-old Pittman doesn’t have a lot of experience running giant corporations. He’s been a job-hopper who succeeded by coming up with the next great idea and persuading everyone around him to get on board.

After skipping college to work his way around the country as a top 40 disc jockey, Pittman went to work for a joint venture of Warner Communications and American Express that eventually became MTV. Pittman is credited with coining the “I want my MTV” slogan.

After Warner sold the channel, Pittman left for a three-year stint as an independent producer. He created “The Morton Downey Jr. Show.”

He returned to then-Time Warner, where he oversaw the purchase, dramatic turnaround and eventual sale of e theme park company Six Flags Entertainment.

In 1995 and ‘96, Pittman was CEO of Century 21 Real Estate Corp. He persuaded the company to invest in the emerging Internet by buying into America Online.

He left Century 21 to run AOL, turning it into a more consumer-oriented company.

His tenure at AOL was renowned for the company’s stratospheric growth as well as the friction between the techies who founded the company and the outsider who eventually taught them that the customer is king.

“Pittman was the fair-haired boy of AOL,” said Bob Daly, the chief executive of the Los Angeles Dodgers who, as co-chairman of Warner Bros. Studios, worked with Pittman. “Bob did a brilliant job of marketing that company.”

Said Sanford Bernstein’s Wolzien: “Bob is a hard-driving marketing genius, knows how to get the pieces to work together whether people want to or not....His style is identifying--before anyone else--how to put pieces together that can make something more.”

That may be true, said Larry Gerbrandt, a senior analyst with Kagan World Media, but “Pittman has yet to prove that he can get AOL Time Warner’s stock price up. He hasn’t proved he can run the company. His history is all ‘get in and get out.”’

Pittman has claimed he will spend the next decade building AOL Time Warner.