Will the Departing Ted Turner Really Create More 'AO-Hell'?

Sunday Business (London, England), February 2, 2003 | Go to article overview

Will the Departing Ted Turner Really Create More 'AO-Hell'?


O farewell, Ted Turner, the gap-toothed Mouth from the South, the swashbuckling savant who sailed for the World Cup and took television news to the world but who is now planning to skulk away with armies of other retirees to smell flowers in the sunshine state of Florida.

Last week Turner, who has always seen himself as part Rhett Butler (he named a son Rhett after the charming but insolent hero of Gone With The Wind) announced that he was planning to quit as vice-chairman of AOL Time Warner, a lofty title when viewed from the outside but lacking any real influence.

Frankly, he could not give a download for anything from the AOL side of the operation; but it is a different story for his babies in the media divisions that still bare his name and which are inextricably linked with the visionary from Atlanta.

Ted is angrier than a teased scorpion about the state of AOL Time Warner ( and he's potentially just as dangerous), making this healthy, wealthy visionary, who is still worried about how his name is used, worthy of watching in the perilous months ahead for the media giant.

There is no end of monkey wrenches he could throw into the works; sustaining the mere speculation of a possible takeover bid for CNN, or even the whole of AOL Time Warner, helps to boost the decimated value of the 132m shares he still holds in the company.

The architects of the original AOL/Time Warner merger, which Turner claims he would have opposed if conversant with the full story, have tumbled like dominoes in the face of the seething anger of shareholders, who have seen their pension funds and option plans decimated by the plunging share price.

Dick Parsons, the diplomatic lawyer-turned-political apparatchik-turned-banker-turned-media-mogul, is left wearing the crown of thorns, knowing that his management's goodwill has taken as big a writedown as the $100bn (u61bn, e92bn) stripped from his balance sheets last week.

Parsons, a White House alumnus, also understands the value of managing expectations: with last week's bombshells he has succeeded in bringing down expectation to a very low level from where the company may be able to recover.

Now he has to reconfigure his pieces under the enormous pressure of knowing that others are ready to swoop if he fails, still unsure as to whether the various pieces will ever fit together and, ultimately, knowing he has little time to get it right before big shareholders replace him with someone from outside.

Top of Parsons' agenda is finding a way of reducing the company's $26bn debt load during a period when earnings are unlikely to grow because advertising revenue problems have spread beyond America Online to Time Warner's cable systems.

The timing could not be worse: AOL Time Warner plans to sell part of its cable operations to the public later this years to raise billions to lighten its debt load; the sudden emergence of fundamental questions about the business means Parsons has to revisit earlier problems he had with AOL because of suspicions about revenues.

Topping the list of possible asset disposals is the Warner Music division, another problem child that, like other record companies, is suffering from internet piracy. There is even talk of putting a "for sale" sign on the Henry Luce parts of the company, the iconic Time magazine and other "old media" assets.

But Parsons will still be in trouble if the ailing online unit fails to respond to the radical surgery prescribed by Jonathan Miller, its new chief charged with getting his troops out of the doldrums and back into attack. …

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