In his official debut as CEO of AOL Time Warner Inc. last Thursday, Richard Parsons tried to calm investors upset that their stakes in the media giant have lost more than 40 percent of their value since the beginning of the year.
He did so by reminding them that the company is No. 1 or No. 2 in virtually all segments of its business.
Parsons — who clearly expected more investor anger at AOL Time Warner's annual shareholder meeting here — called the stock price a "source of deep disappointment" to him and the rest of AOL Time Warner's management, but said speculation that the company could be broken apart is not true.
He called AOL Time Warner the No. 1 movie studio; online service; magazine and book publisher; premium- and basic-cable programmer; and high-speed-data service provider. The No-2 ranked businesses were Time Warner Cable and the Warner Music Group recording label.
Parsons blamed the stock's collapse on the recession, which struck most companies, but hit AOL Time Warner especially hard.
"At the time of the merger, the outlook was rosy and the assessment of risk was low," Parsons said. "In the past 18 months, almost everything has changed — the dot-com bubble burst, and questions arose about the future of AOL Broadband [high-speed versions of the online service]. That led to a dramatic revaluation of AOL and contributed to the bulk of the stock decline."
AOL Time Warner chairman Steve Case also apologized. "It didn't go the way we expected it," Case said.
Parsons restated his five-point plan to get AOL Time Warner back on track: reinvigorate AOL; restore credibility with investors; guard the integrity of the balance sheet; simplify the corporate structure; and re-energize its employees.
Restructuring the Time Warner Entertainment L.P. partnership with AT&T Corp. — and the TWE-Advance/Newhouse partnership with the Newhouse family — are big parts of that simplification process, he added.
But Parsons offered no further detail, aside from noting that AOL Time Warner was continuing negotiations with both parties.
Parsons also declined to say whether AOL Time Warner would be interested in any systems Adelphia Communications Corp. may decide to sell.
"It's not clear as to what exactly is going on [with Adelphia]," Parsons said. "Clearly, Adelphia has attracted interest. Whether and how that plays out, I don't know."
For the most part, shareholders tempered their remarks in the question-and-answer portion of the meeting, with only a handful of shareholders expressing displeasure with management.
That lack of vitriol was not lost on Parsons, who told reporters and investors after the meeting that he was surprised more shareholders weren't upset.
"The tone of the meeting was more gracious and respectful than I had anticipated," Parsons said.
LEVIN'S SWAN SONG
The annual meeting was also a farewell to Gerald Levin, the longtime Time Warner chief who announced his retirement as AOL Time Warner CEO in December. Levin called his 30-year tenure at Time Inc., Time Warner Inc. and AOL Time Warner a "stunning ride."
He didn't elaborate on his future plans, aside from having lunch with his wife, Barbara, and son, Michael, later that day.
Another AOL Time Warner board member — Ted Turner — was also uncharacteristically quiet at the meeting.
Turner, who has said in the past that he regrets having sold his Turner Broadcasting System Inc. to Levin, exited quickly after the meeting ended.
On his way toward the door, in response to a question regarding his past criticism of Levin, Turner replied, "I thought he made a very nice speech."