Richard Parsons is not your typical media mogul. Unlike others of his kind, he is not one to seek out the spotlight — in fact you can almost see the pain in his face when he is forced to talk about himself. Parsons would rather heap credit on his employees, from top managers down to the line workers — the people that he says really move the Time Warner Inc. boat.
But as the captain of that boat, Parsons has done a pretty good job of navigating some turbulent waters in the past few years.
Parsons’ easy manner and self-deprecating nature can be traced back almost to the beginning. He was born in the Bedford-Stuyvesant section of Brooklyn, N.Y., and lived there until he was six years old, when his family moved to the New York borough of Queens. But Parsons has no daredevil stories of growing up on the mean streets.
“It’s not tree houses and the old swimming hole, but it’s the stuff kids do,” Parsons says.
However, he did remember one instance from his Brooklyn past.
“The one recollection I have as a kid: you have these houses, cheek-by-jowl, and you go up on the roofs, and there are these ashcan alleys, where they take their garbage cans back and forth,” Parsons says. “That was the rite of passage — your rite of manhood — jumping across one of those alleys. From one building to the next, five- and six-story flats. I was petrified. I can’t remember whether I ever did it. I looked at it and said, 'Oh, no, I can’t do that.’”
After high school, Parsons received a basketball scholarship to the University of Hawaii. He played until his junior year when a knee injury ended his basketball career.
A WIFE’S ADVICE
Parsons says his decision to go to college in Hawaii — obviously a long way from Queens — was made to satisfy a sense of wanderlust. But when the time came to decide what he wanted to do after college, Parsons says it took the advice of his then-girlfriend (now his wife, Laura) to nudge him in the right direction.
“I said, I don’t know what the heck to do,” Parsons says. “She said, 'You know what? You should think about being a lawyer, because you like to debate.’”
While he admits that his undergraduate career was unspectacular, Parsons shone at Albany Law School, where he finished at the top of his class for three years in a row.
Parsons says he had other choices above Albany Law — the upstate New York grad school was his “safety school” — but his wife had a major influence on that decision, too.
“I applied to a number of different law schools including some big city schools and some party schools,” Parsons says. “Albany Law School was quieter and more out of the way. And her view was that if she was going to work — this was the game plan, she was going to work and I was going to law school. She says, 'Look, if I’m working, you are not going to go to some party school and party all the time.’”
While Parsons joked that his turnaround at Albany Law was fueled by the lack of things to do upstate, he added that he was also driven by a newfound sense of responsibility.
“I got married after I got out of college, and you sort of settle down,” Parsons says. “You get more serious about things. You have somebody who expects you to do something, and I owe my wife a lot in that respect. She was the person to whom I felt accountable, and therefore I tried. Whereas when I was in college, I was completely unaccountable.”
That drive continued after graduation in 1971 — Parsons received the highest mark in the state on the New York State Bar Exam, and was asked to join the staff of then-Gov. Nelson Rockefeller. Rockefeller, in his third term as governor, recruited Parsons to be one of his assistant counsels.
Parsons later became Rockefeller’s first assistant counsel, a job he says entailed “carrying the governor’s water on the third floor [of the state capitol building], to be his liaison with the [state] Legislature.”
ENTER PRESIDENT FORD
When Rockefeller was appointed vice president by President Gerald Ford, Parsons followed him to Washington. He stayed in the Beltway for about two years, working for the Ford Administration in its domestic council. When Ford lost the 1976 general election to Jimmy Carter, Parsons returned to New York, where he joined the law firm of Patterson, Belknap, Webb & Tyler. Parsons stayed there for about five years, ascending to managing partner. Then he made a big career shift, moving to Dime Savings Bank of New York as president.
“I turned 40,” Parsons explains as the reason for the career shift. “They say either you change cars, change wives, or change jobs.”
Parsons stayed at Dime for about seven years, rising to chairman and CEO. He moved on to Time Warner in 1995 as president under then-CEO Gerald Levin.
Parsons had been a Time Warner director for about four years prior to joining the company. He joined the board right after the merger of Time Inc. and Warner Communications Inc.
A few years after joining the board, chairman Steve Ross died, and his right-hand man Nick Nicholas resigned. That left Levin, who had been at Time Warner for years, as CEO.
“It was just Jerry left running the company, and he called me up one day and says, 'Hey, I could use some help over here,’” Parsons says. “'Would you be interested?’ The rest, as they say, is history.”
Parsons had responsibility for the corporate functions of Time Warner, including finance, legal, public relations and government affairs. Later he added responsibilities for the film and music divisions.
Along the way, Parsons developed a reputation as a diplomat, the guy who smoothed over the rough spots. That ability to smooth things over, to get disparate factions to agree, was in sharp contrast to Levin, who at times could appear aloof. And it was a personality trait that helped Parsons throughout his career.
KEY TO SUCCESS
Brera Capital Partners L.P. managing principal Alberto Cribiore, a long-time friend and neighbor of Parsons, says that instead of a hindrance, Parsons’ diplomatic nature has been a key part of his success.
“He’s a great guy, a very well-rounded guy and very much at ease with himself,” Cribiore says. “[Being a diplomat] is the only way to get things done. He’s very even-keeled and able to see the important tasks.”
As an example, Cribiore says that about 20 years ago, Parsons bought a new car — a Lexus coupe — that was a big expense for his growing family. One day Parsons learned that a local teenager he had hired to feed the family dog took the car out for a drive and crashed it. No one was hurt.
“Neither of us had a lot of money at the time,” Cribiore says. “Richard was laughing about it. I think I would have gone berserk. He says it was nothing major, they could get it fixed.”
That easy-going style helped Parsons after the merger between Time Warner Inc. and America Online Inc. Parsons was named co-chief operating officer of AOL Time Warner. Former AOL executive Bob Pittman was the other co-COO. After it became obvious to Wall Street that the merger wasn’t working as planned, Levin stepped down in December 2001, naming Parsons as his successor, effective the following May. Pittman, who became sole COO after Levin’s announcement, resigned from the company in July 2002.
While a savvy executive, Pittman had a reputation for being brusque. Parsons’ more affable and diplomatic manner was seen by many as a better fit with the media giant’s autonomous divisional structure.
Not that Parsons didn’t have other opportunities. Prior to becoming Time Warner CEO, Parsons was said to have received several offers to head other companies (tobacco giant Philip Morris was one suitor, according to published reports) and even to return to government service.
Parsons acknowledged that he had received offers, although he was not specific. But Parsons stayed at Time Warner because he knew that the plan was for him to take the reins eventually, at the board of directors’ discretion.
“When I came here, it was because it was a broader, more interesting business that was global as opposed to regional,” Parsons says. “And in my mind, I assumed that if it worked out, one day I’d run the company. And so you get in the game, you play until the end of the game.”
The stakes were raised considerably in that game after AOL co-founder and AOL Time Warner chairman Steve Case announced on Jan. 12, 2003, that he would step down (he remains on the board of directors) effective May 2003. Four days later, the board added chairman to Parsons’ duties.
REMARKABLE PLEDGE
Parsons inherited a company in turmoil. The stock price was plummeting, and the company was trying hard to deal with a huge debt load and a corporate structure that was muddied up by several complicated partnerships.
Shortly after taking the reins at AOL Time Warner, Parsons did a remarkable thing for CEOs of major American corporations at the time — he was straightforward with his shareholders and the analyst community.
Parsons pledged to bring down AOL Time Warner’s debt (then at $26 billion) to $20 billion by the end of 2004. (It was down to $18.8 billion in the first quarter of this year.) He also promised to sever the many side partnerships that seemed to complicate Time Warner’s corporate structure. (He managed to unwind the Time Warner Entertainment relationships with Comcast Corp. and Advance/Newhouse Communications Inc. at favorable terms.) And he vowed not to make projections that he didn’t believe he could keep.
That last one was important. In the heady days after the AOL merger, the AOL side of the house was known for making aggressive growth projections.
For the most part, Parsons has delivered — he admits that AOL still needs some work, but it is far better off than it once was.
The stock price remains a disappointment. It has risen 12% in the past 12 months, but it is still considered to be trading well below Time Warner’s asset value. However, Parsons has managed to right a ship that was considered by many to be faltering. In the first quarter of this year, operating income before depreciation and amortization rose 27% to $2.4 billion on a 9% revenue gain to $10.1 billion.
Cribiore says that Parsons’ skills as a diplomat and a manager are apparent at the turnaround he has effected at Time Warner.
“In a company the size of Time Warner, there is no way that one person can get everything done,” Cribiore says. “It’s is very important getting people working with you in the same direction. In order to achieve that, you must be a very good diplomat, a very good politician, a very good reader of character, and be able to communicate with people so they understand what you believe is needed and get them to do it. And that is what Richard has done.”
