From the Media Week Conference

CNN-ABC NEWS MERGER TALKS ON HOLD

Richard Parsons Cites 'Very, Very Complicated' Nature of Such a Deal

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NEW YORK (AdAge.com) -- In a lunchroom address to investors at the UBS Warburg Media Week Conference, AOL Time Warner CEO Richard D. Parsons
Photo: AP
AOL Time Warner CEO Richard Parsons.
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said the company has "hit the pause button" on talks exploring a potential CNN-ABC News merger.

Mr. Parsons said that while such a link of news operations made excellent conceptual sense, implementing it would be "very, very complicated." Of particular concern, he said, were issues of how one partner's content would be branded when used by the other's newscast, as well as the feeling of "once you go down that road, can you go back?"

He said AOL Time Warner has held talks with ABC, a division of Walt Disney Co., as well Viacom's CBS News but that ABC was currently a more excited potential partner.

'No numbers'
Mr. Parsons spoke at a conference in which virtually every other major media company was presenting outlooks for the year ahead. He cautioned early on in his remarks that there would be "no numbers" -- a pledge he broke once, when discussing debt load -- and that AOL Time Warner's earnings guidance for 2003 was upcoming. Such talk underscored the complexity of the still-troubled media giant. In his remarks, Mr. Parsons acknowledged one of his key challenges was to simplify the company's financial structures, a move, he said, that was prompted by the urgings of star investor Warren Buffett.

In the absence of financial projections, Mr. Parsons offered a status report on key areas he identified when he began his tenure seven months ago. Among them, simplifying the company's finances; repairing America Online, the troubled online division of AOL Time Warner; restoring employee morale; and, most important for today's forum, winning back investor confidence.

A distracted CEO
At times the CEO seemed downcast and distracted -- stumbling, for instance, over the new titles for Media and Communications Group Chairman Don Logan and Entertainment and Networks Group Chairman Jeff Bewkes, who report to him, and mistakenly referring to HBO as AOL at one point -- while in the role of having to express the company's contrition over disappointing its investors.

"This is not a 'trust us' situation," he said, referring to the company's plans to revive America Online through a focus on exclusive content and a new strategy for broadband access. "We understand those days are over. Watch us. Measure us. Draw your own conclusions." More intriguingly, Mr. Parsons suggested the reasoning that created mega-conglomerate companies like AOL Time Warner was incomplete.

"We got paid for doing deals," he said, in a deal-happy 1980s and '90s. The thinking was, he said that "creating large international global players would create value."

"But it's only an opportunity" to create value, he added. "In order to extract value, you have to manage assets" -- a task that, he admitted, calls for "a different management style -- far more collaborative -- than [existed] for the last half a century."

AOL spin-off?
Not surprisingly, Mr. Parsons was quick to dismiss a frequently asked question regarding a potential spin-off of AOL.

"Could it be done? Yes. Would it be a good idea? No," he said.

In any event, judging from Mr. Parsons comments, the company is likely to stick by its planned strategy for AOL, which was announced Dec. 3 only to see a significant drop in its stock price. Asked by Adage.com about the strategy, Mr. Parsons declined to give a specific time frame, aside from saying, "We are prepared to give it some time."

Pressed on the matter, Mr. Parsons said, "There is always a Plan B," but added, somewhat impishly, "I can't tell you what it is."

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