Time Warner peacemaker Parsons to hand over reins

By Kenneth Li

NEW YORK (Reuters) - Time Warner Inc's outgoing Chief Executive Richard Parsons brought peace after one of the worst corporate mergers in modern corporate history, but he is leaving the world's biggest media company with unfinished business.

The affable, soft-spoken New York native won plaudits for taming warring company factions after the disastrous $106 billion merger with AOL, which ignited a spate of government investigations and a free-falling stock price.

He survived a proxy battle last year against activist shareholder Carl Icahn, who wanted to break up the conglomerate whose portfolio includes a movie studio, magazines, television networks and the Internet.

"There were some difficult times, and he kind of helped quiet things down," said Steve Case, AOL founder and a former chairman of AOL Time Warner. "I think that's been a major contribution."

Time Warner said on Monday that Parsons will hand the CEO reins to right-hand man Jeffrey Bewkes, the chief operating officer, on January 1. Parsons will remain chairman.

As CEO, the 59-year-old former lawyer settled investigations over AOL's accounting with the U.S. government, fended off hostile shareholders and turned around the fortunes of most of the company's divisions, which remain leaders in their respective businesses today.

His five-year tenure, however, will end as it began -- with trouble at AOL. The once dominant Web access service, whose perky greeting "You've got mail!" made the Internet a fixture in American society, now trails behind Google Inc, Yahoo Inc., and even Microsoft Corp. in terms of the number of users.

AOL's four consecutive quarters of 40-plus percent growth in online advertisement sales screeched to a halt earlier this year as it restructured for the fifth time in six years.

While some analysts said the timing was right for Parsons' departure because Time Warner needs a more aggressive strategist now, there was no question on Wall Street that his easy-going demeanor and trademark self-deprecating humor helped anchor the company through its troubles.

"He provided tranquility and reason at a time when there were concerns over the company from the fallout from AOL merger," said Mario Gabelli, whose Gamco Investors Inc is a Time Warner shareholder.

POLITICAL CAREER?

A member of the corporate elite, Parsons sits on the board of Citigroup Inc and is part of the team looking for a successor to CEO Charles Prince.

In 2002, the six-foot-nine Parsons, with a salt-and-pepper beard, was considered an unlikely leader of the newly combined AOL Time Warner.

As Time Warner ironed out its merged structure, he was expected to move on to a political career. Parsons has a political background, having served as a White House aide under U.S. President Gerald Ford, has breakfasted with Bill Clinton at trendy restaurants in Harlem, and was co-chair of the President's Commission to Strengthen Social Security.

Parsons was also on the transition teams of New York City Mayor Michael Bloomberg when he first took office and incoming Mayor Rudolph Giuliani in 1993.