To those who follow the ups and downs of media behemoth Time Warner, some comments made yesterday by CEO Dick Parsons will probably be of interest. Some may even be surprising.
Parsons spoke at a gathering of Time Inc. alumni, on the eighth floor of New York City's Time & Life Building. I was there and took notes.
First, it should be said that Parsons was exhausted, having just returned from China. "I'm not sure we're gonna do a lot of business over there," he began. "A lot of what we do is subversive as far as they are concerned. We [Time Warner] bring information to people. That's not exactly where they are."
Based on his observations, he predicted that China will be the dominant economy in the world in 20-25 years. "Fifty years out, India might supersede it. The two big Asian tigers are coming on," he told his audience.
Parsons said he was using the opportunity yesterday as a sort of rehearsal for the company's upcoming annual shareholder meeting. Here, in capsule form, is what he said.
STRENGTHENING MORALE: In the aftermath of the AOL-Time Warner merger debacle, "things [at TW] are pretty good again. Morale is once again good. We're regaining our place in the marketplace.... We are the most praiseworthy of media companies."
HOW CLOSE THE COMPANY CAME TO BANKRUPTCY: "This company could have gone over the falls in 2002. We were teetering."
FUTURE ACQUISITIONS: "We're not looking to do any more transformational acquisitions. Our record on transformational businesses has not been great." (Laughter ... and sighs.) However, the company's Time Inc. unit is "about to buy a magazine company in Mexico." He didn't name it.
AMERICA ONLINE: Contrary to what you may have read the last few days, based on reporting in TW's Fortune magazine ("there's less to that than there appears to be," Parsons said), a spinoff is not likely. But, he noted, "We could spin it out and retain majority ownership -- if an advertising play" doesn't work. The plan for AOL, according to Parsons, is to make it "more like Yahoo! and MSN -- a Web destination." The company is "trying to roll out AOL.com so it can compete with the Yahoo!s and MSNs.... We're going to make [AOL's Web portal] content-rich," relying on the resources of TW's other divisions. For example, the new AOL.com, to be introduced "in a couple of months," will feature a People magazine channel, an Entertainment Weekly channel, an E! channel," and so on, drawing on TW's many semi-autonomous content-producing divisions. "I think this is gonna work," Parsons said, adding optimistically, "it's one of the things that's gonna move the stock" price.
ON THE DEAL TO BUY ADELPHA CABLE (W/COMCAST): "It was a once-in-a-lifetime opportunity. We got the pricing right."
ON THE RE-FORMATTED (COMEDY-FOCUSED) TBS CHANNEL: TBS, whose business had been fading, "is now the No. 2 ad-supported cable network in the United States," thanks in large measure to the comedy programming it has purchased from TW's Warner Bros. unit. The so-called Adult Swim programming block, which airs late at night (featuring for example, Family Guy), is a smash with young viewers.
MAGAZINES: "They have the benefit of the three B's: bedroom, bathroom, beach." In other words, the business is strong and sustainable. Said the CEO: "Our challenge [with magazines] is to grow our presence and migrate our brand strength from print to digital media, so if there are huge demographic shifts in the way people use media, we're right there."
THE VISION: Parsons told the Time Inc. alums that corporate colleagues often say to him, "Dick, you're our guy, but you don't have any vision. It appears I'm vision-challenged." Therefore, he said with the faintest hint of a smile, he continues to seek "a vision" for the company.
HIS TIME-CONSUMING FOCUS ON PERSONNEL MATTERS, contrary to widespread corporate practice in the U.S.: He does this because, he said, knowing your employees and what's on their minds is vital to running a first-tier company. "Jack Welsh used to do that," Parsons cracked, "but he's old."
THE STOCK: This is what you wanted to hear if you're a long-suffering shareholder. The "prospects are good" for a reinstatement of dividends.
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