January 16, 2003 5:03 PM PST

Parsons to replace Case as AOL chairman

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AOL Time Warner on Thursday said CEO Richard Parsons will assume a newly created position of chairman and CEO following a unanimous vote by the company's board of directors, replacing outgoing Chairman Steve Case.

The move cements Parsons' authority over the troubled media giant, giving him a dual executive role at a time when a wave of business scandals has heightened concerns that U.S. corporations have not done enough to ensure adequate boardroom checks and balances.

Parsons will assume the position effective May 16, at the company's annual shareholder meeting, bringing a new test to his reputation as a savvy corporate politician and conciliator.

"I am highly gratified that the board shares my determination to maximize AOL Time Warner's tremendous potential," Parsons said in a statement. "As we address the challenges facing our company and the industries in which we operate, I will work together with the extraordinary people in this company to focus on increasing value for our customers and our shareholders."

The announcement comes less than a week after Case announced his resignation as executive chairman under pressure from disgruntled investors, including the company's largest shareholder, Ted Turner. Since the historic merger of America Online and Time Warner two years ago, the company's stock has declined 70 percent, wiping out some $200 billion in market value.

Parsons faces an enormous task in righting a company that has listed badly amid an advertising downturn that turned the once-touted growth engine of America Online into an anchor around its neck. Advertising revenues at the division have tanked and subscriber sign-up rates have slipped, weighing heavily on successes at other parts of the company, such as the film studios.

AOL Time Warner is also facing financial pressure under $26 billion in debt and a costly restructuring of its cable division. Those factors have motivated the company to seek to spin off its cable unit in a planned IPO later this spring.

The deal is seen as a major test of Parsons' leadership, which has so far hinged on his abilities as a conciliator capable of wrestling agreement out of fractious disputes more so than delivering results to the bottom line.

So far, Parsons has directed a major management shakeup that has seen all of the key architects of the AOL-Time Warner deal leave the company or demoted. New managers at the America Online division include CEO Jonathan Miller, a former USA Interactive executive whose plans to revive the flagging unit are expected to include layoffs among other cost-cutting moves.

Although Case this week said he had left the company only reluctantly, on Thursday he said he fully supported the decision to name Parsons as his replacement.

"After deliberating this week, the board unanimously agreed that Dick should be named chairman," Case said in a statement. "I am delighted by this decision and look forward to working with Dick to ensure a smooth transition."

 

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