Edition: U.S. / Global

No Use Crying Over Spilled Billions

Published: June 20, 2004

WHEN he became chief executive and, a year later, chairman of Time Warner, Richard D. Parsons was dismissed as a politician who just happened to run the biggest media company in the world. His performance since then suggests that he has a few other skills, but it's the politician in him that has a gift for making an entrance.

Appearing before a gathering of employees at the Warner Brothers Studio in Burbank, Calif., two weeks ago, he walked to the edge of the stage, stretched his 6-foot-4-inch frame to full height and smiled demurely as applause several decibels past polite enveloped him. He wisecracked about the cheesy audiovisuals and quickly acknowledged various people in the audience.

Two years earlier, shortly after he succeeded Gerald M. Levin as chief executive, he appeared before the same audience as the stock of AOL Time Warner, as the company was known then, was sinking toward a record low, making America Online's 2001 purchase of Time Warner one of the worst mergers in American business history. He escaped unscathed from that unhappy gathering, maybe only because of the absence of fruit markets on the film lot. This time, the road show had fewer bumps and even fewer hard questions.

Mr. Parsons, a former banker and lawyer who loves jazz, projects a brand of corporate cool that seems unforced. Barry M. Meyer, who as the chief of Time Warner's Warner Brothers movie studio has shipped bags and bags of loot from the Harry Potter series to corporate headquarters in New York, introduced Mr. Parsons by playing a snippet of Johnny Nash's optimistic ''I Can See Clearly Now,'' but reminded him that, two years earlier, ''Yesterday,'' the Beatles' sung tale of regret, would have been appropriate.

Mr. Parsons, 56, recalled the day. ''When we were here in '02, Barry said that people were disappointed and somber,'' he said, then paused a beat for effect. ''They were sullen, bordering on mutinous, is what they were.''

Having gently validated the brutal realities of the past, Mr. Parsons took notice of the lectern that had been adjusted for the diminutive Mr. Meyer. ''I'm not going to use the podium,'' he said, standing a bit straighter to express the disconnect between his frame and the dais. ''This is like the hobbit podium here.'' He immediately segued into a state-of-the-company stump speech, including a prediction that ''Harry Potter and the Prisoner of Azkaban'' would gross $94 million in its opening weekend. His sanguinity was met with skepticism by the crowd. (He turned out to be exactly correct.)

As a public personality, Mr. Parsons has range. High/low, black/white, streetwise/wise to the Street. Immediately after the merger, some incoming executives dismissed him as a drab banker whose presence was a nod to diversity, but Mr. Parsons emerged from the later wreckage as a seasoned Time Warner executive who knew the company but had enough deniability to run it after things went wrong.

He cashed in stock for $35 million in a merger that all but obliterated the stock-based retirement accounts of many Warner Brothers employees, yet the studio workers at the meeting guffawed at his jokes. It was apparent that they believed in Mr. Parsons more than they ever did in those who went before him.

After it became clear that the merger, intended to create a sum greater than its parts, instead had sent $100 billion in value down a rathole, the two chief architects of the deal -- Mr. Levin and Stephen M. Case, co-founder of America Online and its chairman and chief executive before the merger -- left the company. So did Robert W. Pittman, one of two chief operating officers and the man who was supposed to make it all explode into a new kind of enterprise.

As the most senior executive left standing, Mr. Parsons, the other chief operating officer, looked at the bag of snakes that AOL Time Warner had become and thought he could do better, according to Nick Nicholas, who served as Time Warner's co-chief executive in the early 90's. ''He looked at the job and said, 'Nick, I am made for what needs to be done here,''' Mr. Nicholas recalled.

IN contrast to his predecessors, who promised an endless string of synergistic profits that never materialized, Mr. Parsons ratcheted down expectations and then overdelivered, most recently by doubling profits in the first quarter of this year. He also reduced the company's $30 billion in debt by a third. He picked the company's two best business operators -- Don Logan from Time Inc. and Jeffrey L. Bewkes from HBO -- and gave them authority over the company's sprawling enterprises. They delivered, providing ballast to a gigantic entity that had seemed in danger of tipping over.

Although Mr. Parsons has been with Time Warner for almost a decade and, as its president, played a significant role in the merger, he is still seen as the new guy. When his former colleagues were pursuing huge and ultimately unachievable goals, he confided to more than one person that he thought they were ''burning the furniture.'' He wanly defended AOL Time Warner's corporate theology until it was patently impossible to do so.