AOL Seeks Peace in Civil War With Turner

Ted Turner has seen three of his wishes come true in recent days.

AOL Time Warner Inc. called off a proposal to merge Turner’s brainchild CNN with ABC News. The head of the conglomerate’s cable networks -- who happens to be a Turner foe -- resigned. And the man picked to take over that cable empire, which Turner built, has the maverick media mogul’s stamp of approval.

The timing is noteworthy given the fact that Turner abruptly stepped down from AOL Time Warner’s management ranks last month after privately complaining that he was being marginalized and no longer consulted on key issues.

Senior AOL Time Warner executives dismiss the notion that the recent string of events was prompted by Turner or made to appease him.

“We are not making decisions based on what pleases Ted,” one top executive said. “These are the right decisions for the company.”

Still, he hastened to add, “It just so happens that they also please Ted.”

But there is no doubt that AOL Time Warner Chief Executive Richard D. Parsons has a vested interest in currying favor with one of the company’s biggest individuals -- and most disgruntled -- shareholders.

Turner, 64, is brash and outspoken even when he’s happy. Since announcing that he would step down as the board’s vice chairman, he has been openly critical of the company on television news shows and in newspaper interviews. Turner also has said he is weighing whether to remain on the board.

Parsons wants him to stay, sources say, because he values Turner’s role as a sounding board. But he also hopes Turner will tone down the rhetoric. Turner also has enough AOL Time Warner stock to send jitters through Wall Street whenever he sells, as he did this month.

With 131 million shares, Turner holds about 3% of the equity in AOL Time Warner. He has been selling shares automatically over the last year to diversify his portfolio by buying safer municipal bonds and as part of his commitment to donate $100 million a year to the United Nations.

But some observers wondered whether Turner was offering a reminder of his financial clout with an unplanned sale: He dumped an additional 450,000 shares for $5 million this month.

AOL Time Warner would not provide details on a meeting last week between Parsons and Turner, although a spokesman said the chairman made clear that “he hopes Ted stays on the board.”

The last two years at AOL Time Warner have been rocky for Turner. The company’s stock price has plummeted since the January 2001 merger between old-line media giant Time Warner and Internet services provider America Online, shaving Turner’s net worth by $7 billion to less than $2 billion.

Even before the merger was completed, Turner lost his operating role over his Atlanta-based cable empire, Turner Broadcasting System, to make room for the incoming AOL executives.

Turner planned to retire as vice chairman at the end of 2001 before a top management shake-up that installed Parsons as chief executive. Turner stayed on at Parsons’ request, in part because he believed he would be handed a bigger role as the company tried to reverse a downward spiral. But he ultimately found himself left out of the loop on key decisions.

Curiously, Turner seems to be having more of an effect on the company since he said he would leave the executive suite.

Last week, AOL Time Warner officially killed the prospective news joint venture between CNN and ABC News, a merger Turner adamantly opposed. This week, Philip I. Kent was rehired by the company to run TBS, which was sold to Time Warner in 1995. Kent had left TBS shortly after the AOL merger.

Turner was overjoyed that his empire was being put back into the hands of one of his own executives. People close to Kent say the new chief executive plans to turn Turner’s enormous office at CNN Center in Atlanta into a conference room that will be a tribute to Turner, with a portrait or some other symbol of the company founder.

Kent replaces Jamie Kellner, who has been at odds with Turner since Kellner founded the WB network with Time Warner in 1995. Turner has wanted to pull the plug on the WB for years, believing that it was a waste of money and that the company would be wiser to put its programming dollars into his Atlanta cable channels, including TBS, TNT, Cartoon Network and Turner Classic Movies.

Wall Street is watching Turner’s next move closely because of his ability to put pressure on the AOL Time Warner stock price with any sale.

“Investors would prefer that Turner was involved, but not too involved. It’s a delicate balance. You may not like his style, but he makes you money,” Kaufman Bros. analyst Mark May said.

“If he were to leave, it might negatively impact the stock,” May added. “Not because he would no longer have an operational role, but because of the fear that he might dump more stock.”

Times staff writer Edmund Sanders in Washington contributed to this report.