Time Warner Inc chairman Richard Parsons said he would probably step down after this year, a move that would allow chief executive officer Jeffrey Bewkes to take over the position at the world’s biggest media company.
“We still have some work to do in the stock market, but our prospects for the future are bright,” Parsons, 60, said at the New York-based company’s annual shareholder meeting today in Atlanta. “I know I am leaving the company in good hands.”
Bewkes, who became CEO in January, has a contract that allows him to retire if he isn’t named chairman after one year. The terms entitle him to as much as US$19 million in base salary and bonuses. The deadline gives the board until Jan. 1 to determine whether Bewkes, 55, will replace Parsons.
Bewkes is planning to divest the 84 percent stake in Time Warner Cable Inc to focus on entertainment assets and the AOL Internet unit. The move will split off a business that accounted for 36 percent of the parent company’s US$11.4 billion in first- quarter sales and a third of its operating profit.
Time Warner named Parsons CEO in 2002 after the US$124 billion acquisition by AOL led to record losses and a 60 percent plunge in the company’s shares, sparking lawsuits from shareholders who alleged AOL inflated its stock price to make the purchase.
Parsons, who joined Time Warner’s board in 1991, spent the first three years of his tenure selling assets and cutting costs to return Time Warner to profitability. He also settled a class- action suit over AOL for more than US$2.5 billion.
AOL continues to be a drag on the company. In the first quarter, AOL’s profit plunged 74 percent as a 1 percent increase in advertising sales failed to make up for the shrinking Internet-access business.
“They’ve really got to get rid of AOL,” Porter Bibb, a managing partner at Mediatech Capital Partners LLC in New York, said in an interview with Bloomberg Television. “If they don’t unload AOL, this company is going to be mired in the low teens.”