A time for bold leadership: Richard Parson's deal-making prowess and ciplomatic touch has catapulted him to become CEO of AOL Time Warner, the world's largest media powerhouse. (Cover Story).

ON AN UNUSUALLY WARM DECEMBER DAY, RICHARD DEAN PARSONS IS WHERE HE usually is--in the thick of the action. One minute, he's in a strategic powwow with top executives, in the next, he's peppered with questions from financial news reporters. Through countless meetings, a blizzard of phone calls, and a series of mini-crises, he maintains his trademark cool.

What makes this day different from any other is that 24 hours ago Parsons was named CEO of AOL Time Warner, putting him in charge of a media leviathan and cementing his position among the global business elite. The move makes the 6-foot-4-inch, scruffy-bearded executive one of three African Americans currently at the helm of a Fortune 500 corporation. The other two members of this exclusive club are Franklin Raines of Fannie Mae, a $44 billion mortgage lender, and Kenneth Chenault of American Express, a $23 billion financial services monolith. (see "Navigating Rough Waters," this issue). Parsons, listed among BLACK ENTERPRISE's 50 most powerful blacks in corporate America two years ago, will be installed in the position in May.

"I think it says a lot about the positive changes that are taking place in the country," says Clarence O. Smith, president of Essence Communications Partners and CEO of Essence Entertainment, speaking of the other African American CEOs appointed within the last few years. "I think if you just think back even just six years ago, none of those appointments were made, and so it seems there's a very important confluence of activities and events that are bringing this about." He says the positive performance of such leaders as Kenneth I. Chenault, Colin Powell, and others led to a "perception of value" of African Americans operating in top positions, paving the way for Parsons' appointment.

The media assets under Parsons' stewardship are just plain mind-numbing. He controls a vast $36 billion empire, as of year-end 2000, that reaches billions worldwide through a host of megawatt brands including, leading online service AOL; Time, Money, and Sports Illustrated magazines; HBO, TNT, and CNN cable networks; Warner Brothers Studios; and a 49% stake in Essence Communications Partners (No. 23 on the 2001 BE INDUSTRIAL/SERVICE 100 list with $148.9 million in gross sales), the publisher of Essence magazine (see chart).

To expand these franchises, the 53-year-old Parsons has a laser beam focus on executing his comprehensive, three-prong strategy. "The immediate goal is to make our assets work seamlessly," Parsons told SE. "I see us going forward by addressing three key areas. We must continue to cultivate our low-hanging fruit such as properties like Harry Potter. The next order is the advancement of technology like interactive TV and downloading music. Finally, we must invent new businesses."

To achieve this grand scheme, he must bring together a sprawling colossus and create one distinct corporate culture. It's no simple feat.

His predecessor, however, believes he's more than up to the challenge. Asserts outgoing CEO Gerald Levin:" I have the greatest confidence in Dick Parsons' ability to lead the company forward, coalesce its diverse interests, and work with our strategic partners to achieve ambitious goals."

Even President George W. Bush is a fan of Parsons' leadership prowess. When he appointed the executive to serve as co-chair of a commission to overhaul Social Security last May, he said: "Bichard Parsons is one of the leaders of this nation's information age economy. Few people have served more tours of duty in the American government and business ... [He] represents, in our time, the spirit of business statesmanship at its highest."

A TIME FOR CHANGE

When the $106.2 million AOL--Time Warner merger--the largest such transaction in history--was completed roughly a year ago, there had been much speculation about the company's future leadership. Analysts say that even though the recent management shuffle came as a shock, word is that Levin had been quietly planning his retirement for as long as a year, consulting with board directors and executives to devise a transition plan.

Why now? Maintains Scott Kessler, a securities analyst at Standard & Poor's: "My impression is that the transitional plan was just [delayed] by the fact that you had an economic downturn that was affecting the company. My guess is that [Levin] would've probably announced his plans to leave before he did, but he didn't because of a lot of things that were happening in the economy and in the Internet sector."

With the company basking in the glow of the success of New Line Cinema's Harry Potter & the Sorcerer's Stone (which grossed $219.7 million in its first three weeks), and the anticipated success of the movie adaptation of J.R.R. Tolkien's Lord of the Rings: The Fellowship of the Ring, Kessler says the investment community is thinking more positively about AOL Time Warner, allowing Levin to step down without leaving on a sour note. And Wall Street also liked the news, surprise or not. AOL (NYSE: AOL) stock gained 1.08, or 3.11%, to close at $35.83 on December 5, the day of the announcement.

Over the past year, the buzz was that Robert W. Pittman, co-COO and Parson's equal at the company, would be Levin's heir presumptive. In fact, a cover of Business Week hailed Pittman and Chairman Steve Case as "Men of the Century." In his position, Pittman oversaw AOL and Time Warner's cable systems, magazines, cable channels, and the WB network--roughly 86% of the company's expected 2001 cash flow. Parsons, on the other hand, was responsible for the content business--primarily filmed entertainment and music--and all corporate staff functions, including financial and legal activities.

The board, however, viewed Parsons as the better executive. Industry watchers say he was picked over the more visible and vocal Pittman because of his experience in running a large global business, knowledge of regulatory issues, and contacts in Washington, D.C., having been a corporate attorney and a senior White House aide under President Gerald Ford.

Under the new management structure, Pittman will serve as the company's sole COO, and all division CEOs will report to him. He, in turn, will report to Parsons. (Case, the founder of AOL, will remain chairman.)

David Joyce, an equity analyst at Guzman & Co., an investment banking firm in Miami, points out that Parsons is lead negotiator in the media conglomerate's bidding war (along with Microsoft Corp., Cox Communications Inc., and Comcast Cable) for cable television operator AT&T Broadband. Should AOL Time Warner have the winning bid, the deal is sure to be chock-full of regulatory snafus. AT&T Broadband, a division of AT&T Corp., has 14.4 million subscribers as of June 30, 2001, making it the largest in the industry. Time Warner Cable is No. 2 with 12.67 million subscribers, according to the National Cable & Telecommunications Association.

Parsons has also demonstrated vision and can effectively communicate and execute strategic plans. "What he brings to the table is that he's probably more effective as a big-picture thinker than Pittman," Kessler adds. "Pittman is a more logical choice for COO because basically he's a great operations guy, and you really need someone who's more visionary oriented for [the CEO slot], and Dick Parsons fits that mold."

Also, expect the new corporate chief to offer more realistic financial goals. When the two companies merged, management promised annual revenue growth of 12% to 15%. Because of a weaker advertising environment, revenue growth is expected to be closer to 5% to 7% next year. This news did not give investors warm fuzzies.

MAKING HIS BONES

Parsons will need to summon his impressive diplomatic skills to unify the old economy stalwart Time Warner and the younger, new economy structure from AOL. "My sense is that Parsons is truly a statesman and that's really what you need in a CEO's position," says Joyce. "He's got a really even keeled, witty temperament about him and that's maybe what's settled factions within the company. He's got an ability to coalesce the different factions."

A self-proclaimed "Type B" personality, the New York native made his bones in politics and finance. And throughout his career, the graduate of the University of Hawaii and Union University's Albany Law School has presented himself as a roll-up-your-sleeves leader with a combination of sound judgment and accessibility. "I'm kind of a lunch-pail manager," says the laid-back Parsons. "Where Jerry Levin was more cerebral and strategically focused as a CEO, I will tend to demonstrate more of an in-the-trenches style of leadership. I like to be with the troops."

That can-do attitude has served him well. Before he was 30, he served as an assistant counselor to Republican New York Governor Nelson A. Rockefeller; deputy counsel to Rockefeller (when he became vice president in the Ford administration); and associate director of the White House's Domestic Council. He left Washington, D.C., in 1977 and spent more than a decade at the Wall Street firm Patterson, Belknap, Webb & Tyler.

By 1988, he was tapped to become the president and COO of Dime Savings Bank. Two years later, he became CEO. In that role, he pumped life into a bank virtually on life support. In 1990, when bank regulators discovered Dime was saddled with $1 billion in bad debts, he fended off regulators, slashed middle management, and set up an internal "bank" to manage as well as write off and sell nonperforming mortgages and other loans. By cleaning up the bank's balance sheet, he was able to orchestrate the merger between Dime and Anchor Savings Bank, another ailing institution, in 1994. He managed to transform his small regional thrift into a thriving financial monolith with $20 billion in assets--the fourth largest thrift in the nation at the time.

THE GO-TO-GUY

When he assumed the presidency of Time Warner Inc. in February 1995, he displayed the same mixture of diplomacy and determination. As Levin's right-hand man on strategic and financial issues, he worked on the company's balance sheet and spent countless hours talking to Wall Street. In addition to selling Levin's multimedia vision of Time Warner, he also supervised the coordination of the company's operating divisions. One big advantage: Parsons knew the company because he has served on the board since 1991.

His approach made him the company's go-to guy when dealing with sticky situations. When Time Warner refused to carry the Fox News Channel and Disney Channel on its cable system last year, it created a major feud among the nation's leading media companies. It was Parsons who brought parties together, settled disputes, and handled the negotiations. He was so effective that Time Warner adversaries, News Corp. Chairman Rupert Murdoch and Disney Chairman Michael Eisner, gave Parsons high marks on his integrity-oriented approach to deal making. And Parsons' insider status in Washington, D.C. and New York--he's served as chairman of Harlem's empowerment zone and as a member of the transition team for New York Mayor Michael Bloomberg--helps the company when it comes to regulatory squabbles.

He'll have to show the same level of commitment and dexterity in grappling such internal issues as management diversity. Despite Parsons' milestone, AOL Time Warner has an abysmal track record of promoting blacks and other minorities as division heads and to other senior posts. "One of my objectives is to make greater strides in having our workforce reflect the customers and community that we serve," he says. "We need to make more progress in our senior management ranks."

Analysts say that though Parsons is a "behind-the-scenes" executive, his commanding presence and comfort with addressing both investors and the investment community should serve him well in his more visible role. This is not to say, however, that the CEO-to-be will become a media darling. "In a big organization--particularly a media organization--you're going to have some big personalities," says Joyce. "So you're going to have some rock stars, but you also need people who can get things done behind the scenes."

One thing is certain. Whether inside or outside the corporate corridors, Parsons never shies away from the action. "We're off to a good start. I'm ready to kick the company into second gear," he says.

Richard Dean Parsons

BORN: 1948, Brooklyn, New York

TITLE: Chief Executive Officer, AOL Time Warner Inc. (May 2002)

EDUCATION: University of Hawaii, 1968; Albany School of Law at Union University, L.L.D, 1971 (valedictorian)

RESIDENCE: New York

PERSONAL: Married, Dr. Laura Parsons; three children, Gregory, 29, Leslie, 27, and Rebecca, 26

CAREER: Assistant counselor, New York Governor Nelson Rockefeller, 1975; deputy counsel, Vice President Nelson Rockefeller, 1975; associate director of White House Domestic Council (under President Gerald Ford), 1976; partner, Patterson, Belknap, Webb & Tyler, 1977-1988; Dime Bancorp, 1988-1995 (rose from president and COO to chairman & CEO); president, Time Warner, 1995-2001 (has served on Time Warner board since 1991); co-COO, AOL Time Warner, 2001

APPOINTMENTS: Co-Chairman, Presidential Commission on Social Security Reform, 2001; member, New York City Mayor Michael Bloomberg Transition Team, 2001; Chairman, Upper Manhattan Empowerment Zone, 1995-2001; chairman, Apollo Theatre Foundation, 2000; chairman, New York Economic Development Corp., 1995-1997; chairman, New York City Mayor Rudolph Guiliani Transition Team, 1993

BOARD AFFILIATIONS: Citigroup, Estee Lauder, Lincoln Center, Museum of Modern Art, Colonial Williamsburg Foundation, Howard University

HOBBIES: Jazz, watching boxing matches, oenology (the study of wines)

VACATION SPOT: Block Island, Rhode Island; Tuscany, Italy

ENTREPRENEURIAL VENTURE BACKED: Co-investor in UrbanAmerica L.P., a real estate investment firm acquiring and developing properties in urban neighborhoods, with American Express CEO Kenneth I. Chenault

Magazines

                ADVERTISING
                  REVENUE
                IN MILLIONS

1] Time Inc.             $3,186.6
2] Hearst                 1,286.6
3] Conde Nast             1,185.4
4] Hachette Filipacchi      825.7
5] Meredith                 729.0
6] Gruner & Jahr            619.1
7] Primedia                 548.6
8] Parade                   458.5
9] Gemstar-TV Guide         332.9
10] McGraw-Hill             326.7

Movies

               BOX-OFFICE
                 REVENUE
              IN MILLIONS *

1] Warner Brothers       $1,005.7
2] Universal                909.7
3] Buena Vista              846.4
4] Fox                      810.7
5] Paramount                768.9
6] Sony                     656.7
7] Miramax                  575.4
8] MGM/UA                   447.8
9] Dreamworks               400.3
10] New Line Cinema         398.0

Music

              EST. WHOLESALE
                 REVENUE
               IN BILLIONS

1] Universal                $2.95
2] Bertelsmann               1.85
3] Sony                      1.72
4] Warner                    1.72
5] EMI                       1.07
6] OTHERS                    1.81

Internet

             U.S. VISITORS,
             OCTOBER 2001
         IN MILLIONS([dagger])

1] AOL Time Warner           83.9
2] Microsoft                 70.7
3] Yahoo                     68.4
4] Terra Lycos               39.5
5] X10.com                   39.3
6] Vivendi-Universal         36.5
7] About/Primedia            33.2
8] eBay                      25.9
9] Walt Disney               25.4
10] eUniverse Network        25.2

Cable Systems

        CABLE SUBSCRIBERS
   IN MILLIONS [(double dagger)]

1] AT&T Broadband            14.4
2] Time Warner               12.7
3] Comcast Cable Comm.        8.4
4] Charter Comm.              6.9
5] Cox Comm.                  6.2
6] Adelphia Comm.             5.7
7] Cablevision Systems        3.0
8] Insight Comm.              1.4
9] MediaCom                   0.9
10] CableOne                  0.8

TV Programming

            U.S PRIME-TIME
               CABLE AVG.
          VIEWERS ([parallel])

1] HBO                        2.2
2] Turner Broadcasting        2.1
3] USA Network                2.0
4] Lifetime                   2.0
5] TNT                        1.9
6] Nickelodeon                1.8
7] Cartoon Network            1.7
8] Disney Channel             1.5
9] Discovery Channel          1.4
10] A&E                       1.4

SOURCE: THE NEW YORK TIMES; PUBLISHER'S INFORMATION
BUREAU; AC NIELSEN EDI; JUPITER MEDIA METRIX; KAGAN
WORLD MEDIA

* AS OF DECEMBER 9, 2001; ([dagger]) AS OF OCTOBER 2001;
([double dagger]) AS OF JUNE 30, 2001; ([parallel]) AS OF
JANUARY 1-MAY 27, 2001.