Dick Parsons
By John M. Higgins -- Broadcasting & Cable, 10/23/2005 8:00:00 PM
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.”
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