Parsons' chief tasks include righting the AOL division and managing the company's heavy debt. In its earnings statement Wednesday, the company blamed AOL as the primary drag on its overall performance and laid out a plan to reduce its debt to about $20bn by 2004. The company said it plans to use free cash flow to pay down debt as well as "other de-leveraging strategies". Steps in that direction include the recent sale of its stake in Hughes Electronics for about $800m, and a planned IPO for its Time Warner Cable unit, which is expected this spring. Further along the line, the company could consider a spinoff of AOL if the division doesn't show signs of improvement, although the company has dismissed such speculation for now. In the meantime, Parsons and his executive team have begun implementing a turnaround plan for the division, although it's too early to judge whether it's working. For the year 2002, the company reported revenue of $41.1bn, a 7 percent increase from 2001, narrowly beating analyst estimates of $41bn, while EBIDTA rose 5 percent to $9.1bn. Free cash flow for the year jumped 153 percent to $4.2bn, largely from higher EBITDA and lower capital spending and requirements. As expected, the company's AOL division reported disappointing financial results. For the quarter, the AOL division's EBITDA declined 11 percent during the quarter while its revenue decreased 6 percent. EBITDA for 2002 dropped 22 percent while revenue slipped 4 percent. AOL's problems went beyond weakness in advertising and e-commerce, with its subscriber base slipping to 35.2 million from 35.3 million in the third quarter of 2002. The division results weighed heavily on overall operations, which saw good returns from several units, lead by its cable division and movie studios. The company said EBITDA for its cable unit increased 13 percent in the fourth quarter, while revenue jumped 12 percent compared with the same period a year previous. For the year, EBITDA rose 12 percent, to $2.76bn, while revenue increased 15 percent, to about $7bn. AOL Time Warner's filmed-entertainment division saw both EBITDA and revenue grow 13 percent in the quarter. For the year, EBITDA jumped 21 percent, to $1.23bn, while revenue grew 15 percent, to just over $10bn, on the strength of hits including Warner Bros. Pictures' Harry Potter movies as well as the first two installments of The Lord of the Rings trilogy from New Line Cinema. "In 2003, our company will strive to run each of our businesses as well as, or better than, before, with a continued major focus on stabilising and revitalising America Online," Parsons said in a statement. The rebel's final yell
Turner's departure, which will take effect during AOL Time Warner's annual shareholder's meeting, closes a chapter in the remarkable and irreverent career of a modern media baron. The founder of CNN pioneered the way news and entertainment were delivered to homes around the world, and he helped make cable television omnipresent in US households. Turner sold his cable network to Time Warner in 1996, in an estimated $6.5bn deal that made him the combined company's single largest shareholder. Brash and unfettered, Turner's influence as AOL Time Warner's largest individual shareholder started off muted, but became all too apparent over the past year. When AOL and Time Warner shocked the business world on 10 January, 2000, with their decision to merge, Turner was ebullient, saying he voted his 100 million shares in favour of the merger. The feeling would not last. Five months later, Turner was notified that he was stripped of his operating responsibility (previously he oversaw Time Warner's cable operations) as vice chairman. The slight incensed Turner and fuelled his animosity toward then-chief executive Gerald Levin, who he publicly blamed for much of AOL Time Warner's problems. Levin abruptly resigned at the end of 2001 and formally stepped down last May, reportedly shown out the door by Turner's influence on the board of directors. Turner would continue to influence the management structure of AOL Time Warner and its board. Last September, Turner and two other influential shareholders, Gordon Crawford, a portfolio manager for investment firm Capital Research and Management; and John Malone, chairman of Liberty Media, began rallying for then-chairman Steve Case to step down, according to two sources close to the company. The wheels were in motion, and by early this month, Case resigned from his role as chairman, opening the door for chief executive Parsons to take control. Turner's announcement comes at a time when AOL Time Warner investors are able to submit shareholder proposals for inclusion in the company's annual proxy. If, for example, investors wanted to run an opposing slate of directors, they could present it to shareholders at the upcoming annual meeting in May. The deadline to submit shareholder proposals comes 90 days before the date of the next meeting. An AOL Time Warner representative said Parsons "anticipates" Turner will remain on the board. "They talk frequently and will be discussing this soon," the representative said.
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