Look across the CEO suites of America's media giants, and you'll
largely find moguls who grew up in the business. Either they were raised in the
industry, or media has been their chosen lifelong career and they spent years
rising through the ranks.
A major exception is Dick Parsons. Before arriving just a decade ago at
what would become the world's largest media company, Parsons had three
careers: in politics, law and banking.
He pulls on all three of those past lives as he continues the monumental
task of reigniting the Time Warner powerhouse that lost its way in a disastrous
merger with America Online and the accompanying accounting scandal.
He's more than halfway there, having put out the worst of the AOL
fires while keeping the company's traditional media units—cable systems,
networks, movies and magazines—from going off track.
Now, Parsons, 57, needs to figure out how to broaden AOL beyond its core
dial-up Internet- access business, keep expanding Time Warner's cable
systems, and maintain the dominance of cable networks HBO, TNT and TBS as gains
from subscriber growth are fading.
Parsons considers his relatively recent entry into media an asset. “It
always helps to have not just an insider's perspective but an outsider's
perspective,” he says. CEOs who grew up in the business—News Corp.'s
Rupert Murdoch, Viacom's Sumner Redstone and Disney's recently departed
Michael Eisner—“probably have a deeper understanding of the workings of
these businesses. I probably pull equal to them when I look at our external
constituencies, customers and government.”
Parsons' varied career has given him a view from many sides of
business. Rather than jumping into politics after law school, politics jumped
at him when his top score on the state bar exam caught the eye of Gov. Nelson
Rockefeller. It was a much different entry into the New York state governor's
sphere than his family's initial stint: Parsons' grandfather once served as
a groundskeeper at the Rockefeller compound.
Parsons served as first assistant general counsel, then followed
Rockefeller to the White House when Gerald Ford tapped the governor as vice
president. Parsons served as associate director of the domestic council in the
Ford administration.
In 1977, Parsons joined New York law firm Patterson Belknap Webb &
Tyler, where he eventually became managing partner. In 1988, he jumped to Dime
Bancorp, a major New York savings bank struggling under the burden of too many
bad commercial real estate loans. In 1991, Parsons became CEO.
Four years later, Time Warner CEO Jerry Levin turned to him to be his
number two, president of the media giant. Parsons certainly had close ties to
the company: He had joined the board of the company's 82%-owned American
Television & Communications subsidiary in 1989 and the board of Time Warner
itself in 1991.
But Levin's move was a surprise at the time because Parsons would be a
COO who had no media operations experience. Nevertheless, he thrived.
In an unusual approach in a TV and movie company, he took the tack of
quiet leadership by building—or sometime imposing—cooperation among Time
Warner's often feuding fiefdoms. From his past, Parsons has taken key
observations that helped him build a more cohesive company.
From his political side, he explains, “there was the recognition of
how powerful the government really is.” No doubt reflecting on the lengthy
criminal and securities investigation into AOL, he adds, “There is, in many
respects, no accountability. [The government] can commit troops to the field,
resources to the field forever. In dealing with the government, you're always
outmatched.”
From his legal practice, Parsons learned to be precise and careful in
his work, and he got a glimpse into the operations of many businesses.
From banking, Parsons learned to focus on consumers. Even
multibillion-dollar banks are lost if they do not focus on myriad contacts with
individual customers, from every time they write a check to whenever they need
a small loan.
That's important to remember as technological changes sweep the media
industry.
“People are telling me about this technology and that technology and
how the whole business is going to change in three days,” says Parsons.
“That's not necessarily true because the one thing that doesn't change
quickly is consumer behavior.”
Even as he showed his business savvy, it seemed that Parsons might be
shortchanged after Time Warner sold out to America Online in 2001. AOL Chairman
Steve Case and his COO Bob Pittman appeared to control the destiny of the
combined companies. Then the Internet boom crashed, and AOL's myriad
accounting scandals made clear that the company was falsely pumping up its
value.
Case, Levin and Pittman were all dealt out of the company. Time Warner
needed a savior, and Parsons was tapped as the executive best equipped to
rescue it.
In the midst of the reconstructing the corporation, Parsons dismisses
the trend of giant companies' trying to shrink by spinning off assets.
That's the path Viacom and Liberty Media are on, and activist investor Carl
Ichan thinks Time Warner should follow.
But Parsons thinks that shrinking reduces a company's international
clout and makes it more difficult to adapt to shifts in technology. “Scale
players are going to have an advantage,” he says. “Big is going to be
better than small.”
