April 4, 1948 • Brooklyn, New York
Chairman and CEO, Time Warner
Business executive Richard Parsons has been called a teddy bear, a master diplomat, and a charmer, but perhaps the best description that has been applied to him is "friendly giant." Standing at 6 feet 4 inches, with broad shoulders, he is a physically impressive man who could fill any boardroom. But, in this case, Parsons sits at the helm of one of the largest media companies in the world, Time Warner. When Parsons was named chief executive officer (CEO) in 2002 and chairman in 2003, he became one of the most powerful executives in the United States, but he also inherited a mountain of problems. A 2001 merger between Internet icon America Online (AOL) and Time Warner, a leader in the entertainment industry, had proven to be a failed experiment. As a result, the company struggled to maintain its credibility, its stock prices tumbled, and it faced $27 billion in debt. By the mid-2000s, however, analysts reported that Time Warner was on a definite upswing: employee morale was high, investors were newly confident, and the monstrous debt had been significantly slashed. And most agreed that friendly giant Richard Parsons had been just what the fractured titan needed.
Although Richard Dean Parsons regularly makes Fortune magazine's annual list of the most powerful people in business, and he is considered to be one of the most respected African American executives in the country, he came from an average working-class background. He was born on April 4, 1948, in the Bedford-Stuyvesant section of Brooklyn, New York, and was raised in the New York borough of Queens. Parsons, however, was an extremely bright young man, who went on to graduate from high school when he was just sixteen years old. After graduation, he attended college at the University of Hawaii, where he excelled both academically and socially; Parsons was a varsity basketball player and the social chairman of his fraternity. While in Hawaii, he also met his future wife, Laura Bush.
Parsons had no clear idea what direction to take after college, but at the prompting of Laura, he decided to go to law school. According to Bush, it was the most logical decision since Parsons enjoyed arguing so much. Apparently it was the right decision. Parsons worked part-time as a janitor to pay his way through the University of Albany Law School in New York, and when he graduated in 1971, it was at the top of his class. That same year, he scored the highest marks out of the nearly four thousand lawyers who took the New York State bar examination.
"I always knew I'd rise to the top; it never occurred to me that I couldn't."
Just twenty-three years old, and fresh out of law school, Parsons landed a job as an aide on the legal staff of Nelson Rockefeller (1908–1979), the governor of New York. He became such a trusted adviser that in 1974, when Rockefeller headed to Washington to serve as vice president, Parsons was invited along. In Washington, the young lawyer also worked directly with President Gerald Ford (1913–), first as general counsel and then as an associate director of the domestic council. Thanks in part to such associations Parsons became what he frequently describes as a Rockefeller Republican, a person who is conservative when it comes to economic matters, and more liberal concerning social issues. For example, during his Washington years, the social-minded Parsons was chairman of the Wildcat Service Corporation, an organization that provides job training for people who have difficulty finding work because of past criminal records, addictions, or poverty.
Parsons's tenure with Rockefeller and Ford opened up many doors for him and brought him to nationwide attention as an up-and-coming young executive. So, in 1976, when President Ford lost his re-election bid to Jimmy Carter (1924–), Parsons did not lack for opportunities. In 1977, he returned to New York, and at the request of former U.S. Deputy Attorney General Harold R. Tyler Jr., he joined the law firm of Patterson, Belknap, Webb & Tyler. He quickly became a star in the firm and in just two years was named partner. In his eleven years with Patterson, Parsons cemented his reputation as a skilled negotiator. He also expanded his web of connections, taking on such high-profile clients as Happy Rockefeller (1926–), the widow of Nelson Rockefeller, and cosmetics giant Estée Lauder. In addition, Parsons provided legal counsel to several major U.S. corporations, including the Dimes Savings Bank of New York, the largest savings and loan institution in the state.
In 1988, just when it seemed that Parsons was poised to become head of his law firm, the news was announced that he had accepted the position of chief operating officer (COO) of the Dime. In doing so, he became the first African American to head a lending institution of such proportion. Many, however, questioned the appointment since Parsons had no real experience in the banking industry. Skeptics also wondered how Parsons would fare in his new job considering the bank was facing financial ruin. As a result of the savings and loan crisis of the mid-1980s, the Dime had lost some $92.3 million; it was also under scrutiny from federal regulators.
Parsons lost no time in putting his years of Washington deal-making into action. He also set out to streamline the bank's operations. As part of his management restructure, Parsons opted to lay off almost one-third of the Dime's staff. It was a drastic move, but he also kept communications open with his employees every step of the way. As a result, Parsons became known as the consummate gentleman executive. "He is a persuader, not a dictator," a former colleague told CNET News.com. "He intellectualizes outcomes and gets people to agree with his outcomes." His tactics paid off, and in just a few years, Parsons had reduced the amount of the Dime's bad debts from $1 billion to $335 million.
After taking on the job of chairman and chief executive officer (CEO) of the Dime in 1990, Parsons continued to set the bank on its comeback course. In fact, in 1995 he was key in orchestrating the successful merger between the Dime and Anchor Savings Bank. As a result, Dime Bancorp became the largest thrift institution on the East Coast and the fourth largest in the United States. With the bank on solid ground, Parsons set his sights on a new enterprise.
In 1994, Gerald Levin (1939–), chairman of Time Warner (TW), openly recruited Parsons to take over as president of the company. Again, the business community was rocked by the news. True, Parsons had proven to be flexible enough to succeed in the banking world, but he had absolutely no background in media and entertainment. Many doubted that he could succeed at Time Warner, which was considered to be a media giant, controlling virtually all aspects of the industry, including television (CNN, HBO, Turner Classic Movies, WB Network); film (Warner Brothers, New Line Cinema); publishing (magazines such as Time, People, and Sports Illustrated ); and music (Warner Music Group). Levin, however, felt that Parsons was the right man for the job, and some business insiders were not that surprised. After all, Parsons had sat on the company's board of directors for several years, and had developed close ties with top TW executives.
Parsons assumed his post as president of Time Warner in January of 1995, a job that came with a reported multi-million dollar salary. For the next six years, he served as the number-two executive at the company, and as Gerald Levin's right-hand man. Although Levin was effectively in charge, it was Parsons who consistently took on the tough assignments and it was Parsons who employees turned to for guidance. "Whenever we had a problem with one of the units, Parsons was always the guy who would solve it," former co-chairman of Warner Brothers Robert Daly explained to Business Week. "And he would do it in a way that everyone would feel good about the outcome." In addition, any time that trouble reared its head over regulatory issues in Washington, Parsons came to the rescue by turning to one of his many political contacts.
Time Warner faced its biggest challenge in 2000 when it announced plans to merge with America Online (AOL), which by the late 1990s had evolved into the nation's leading Internet provider. Levin had been in negotiations with Steve Case (1958–), AOL's CEO, for several years. The hope was that by combining forces they would make the most successful merger in history: AOL would have access to Time Warner's massive media content and it would be able to reach even more users thanks to TW's cable television operations. In turn, Time Warner would have unlimited access to the ever-expanding Internet pipeline. The merger was made official in 2001, when AOL purchased Time Warner for a reported $168 billion. It did make history as the largest corporate purchase ever, but it also became known as perhaps the most failed megamerger on record.
After the deal was made, AOL Time Warner's board responsibilities were split directly in half, with one exception: Levin became the sole CEO in charge of operations; Case retained a backseat role as chairman. Parsons took on the role of co-COO, sharing the job with Robert Pittman (1953–), former president of AOL. To many, it seemed that Pittman took on most of the plum assignments in the company, considering he was in charge of the high-profile AOL operations. But it was Parsons who oversaw the units that brought in the most revenue, including Warner Brothers, New Line Cinema, and Time Warner Trade Publishing. He was also in charge of the legal department and human resources. Still, when Levin announced, in late 2001, that he would be leaving AOL Time Warner, the assumption was that Pittman would be his likely successor.
In a December 2001 press conference, Levin stunned the industry when he named Parsons as AOL Time Warner's next CEO. As reported in Jet magazine, Levin commented, "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 our ambitious goals." Once again, Parsons made history, becoming what Adam Cohen of Time called the "first African American to lead the world's most influential media company." The world's most influential media company, however, was struggling. AOL Time Warner's various operating units were still far from achieving a full integration. In addition, thanks to an industry-wide technology slump, AOL, which had promised big revenues, had failed to deliver. Just before Parsons officially took over from Levin in May of 2002, the company posted a quarterly loss of $54 billion, the largest in U.S. history.
Parsons remained optimistic, but he proceeded cautiously. As he told Cohen, "Ideally, you want to underpromise and overdeliver. To the extent that we've lost credibility, repairing it is important." Parsons's critics were not impressed by this middle-of-the-road philosophy, but his supporters pointed out that underlying the nice-guy image was a savvy businessman. As one AOL shareholder told Business Week, "Dick is the right guy to be running the company right now." In this case, Parsons was forced to tap into both sides of his personality. With a calm, cool-headed resolve, he doggedly tackled the problems that lay ahead.
When Robert Pittman stepped down as COO in June of 2002, Parsons quickly reorganized the company's top ranks by promoting some of Time Warner's former division chiefs. And, after taking over as chairman from Steve Case, who stepped down in January of 2003, Parsons went to work to repair the damage from the AOL merger. In mid-2003, he sold off parts of the company that were considered to be noncore assets, including the sports teams, the Atlanta Hawks and Atlanta Thrashers. In his biggest move to trim the $27 billion debt, Parsons sold Warner Music Group in November of 2003 for a reported $2.6 billion.
In spite of its debt, the company reported an overall increase in revenue (6 percent) in early 2004, thanks to three of the Time Warner divisions: film, cable, and network advertising. The biggest boost came from the film division, which had experienced an enormous success because of the Harry Potter and The Lord of the Rings series. The drag on the company continued to be AOL, which consistently floundered. In September of 2003, Parsons made a surprising announcement: AOL Time Warner was undergoing a name change, and would in the future be known as simply Time Warner. "Renaming our company will strengthen the identity of the AOL brand name among consumers," the CEO said in a written statement reported on CNNMoney.com. "America Online is an important part of our company and we expect it to continue to make major contributions to our success in the future."
Analysts wondered about the future of AOL even as Parsons continued to play peacemaker, overseeing Monday morning meetings with his various managers and promising harmony between teams. "It's a collaboration," he told Anthony Bianco and Tom Lowry of Business Week. "Getting your team together is the more important thing." At the same time people speculated about what role Parsons would play in Time Warner's future. In the same Business Week interview, the CEO revealed, "I take this job seriously. It's important I do it well.... But it's not my life. I exist apart from this job."
Some predicted a future in politics for Parsons. In addition to his work for Rockefeller and the Ford administration, the lawyer-turned-banker-turned media executive served in various political roles throughout his career. When Rudolph Giuliani (1944–) was elected mayor of New York in 1993, Parsons headed his transitional council; he served on the transition team when Michael Bloomberg (1942–) became the mayor of New York in 2001; and that same year, he was named co-chair of President George W. Bush's Social Security Commission. Parsons also remained a committed leader in other areas of public and community service. He serves on the board of several cultural institutions, including the Museum of Modern Art and Lincoln Center. He also serves as chairman of the Upper Manhattan Empowerment Zone Development Corporation, which was established to spur the development of business and the growth of job opportunities in Harlem.
Whether he remains with Time Warner or runs for public office, or goes in a totally different direction, Parsons will continue to be a role model in the African American community. He frequently downplays race as a factor or handicap in his success. As he once told the New York Times, as reported by CNNMoney.com, "For a lot of people race is a defining issue. It just isn't for me. It is ... like air. It's like height. I have other things I'm focused on." Regardless, Parsons is consistently applauded by various groups for the inspiration he provides to young people everywhere. In 2004, he was awarded the Better Chance Corporate Award, an annual honor bestowed by the organization A Better Chance, which, according to Hispanic PRWire, "identifies, recruits, and develops leaders among academically gifted students of color." According to Better Chance president Sandra Timmons, as quoted by Hispanic PRWire, "Richard Parsons serves as a role model for aspiring executives of all races, but his success has earned him a special leadership role among African Americans."
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