In late 2001, AOL Time Warner was in free fall. Less than two years after Time Warner had taken one of the boldest steps in corporate history, merging with internet giant AOL, the result was a disaster and an implosion. The company’s stock had plummeted from a peak of $104 to a low of $10, wiping out billions of dollars and raising the question of whether it could even survive. Faced with massive losses, the Time Warner executive who’d initiated the merger, Gerald Levin, resigned as CEO in 2002, leaving the remaining board members with the daunting task of finding a new leader who could right their ship, inspire some sort of confidence and chart a course for the future. The man they chose was Richard Parsons.
It’s been 16 years since that turning point, when the kid from Queens — the laid-back basketball player who found his groove as a lawyer, the African-American who became a White House insider, the accidental executive who reached the summit of American business — was charged with stanching the blood. The fact that he managed and survived — as did Time Warner, which is now on the brink of another mega-merger, with AT&T — is his most striking legacy.
Sitting in his elegant offices over lunch one recent afternoon, 47 floors above Manhattan’s Central Park, the 69-year-old looks back on that time with wry detachment. A decade after he stepped down from Time Warner, he knows he wasn’t a mold-breaker, knows he never set an innovative course for the future, knows his job was simply getting the company back on track. “At that moment,” he says, “they were not looking for a visionary or necessarily Mr. Charismatic or someone to replicate the dimension of a mogul.”
Given Parsons’ experience, many within Hollywood and the investment community have been eager to hear his unique perspective on AT&T’s proposed $85 billion deal to acquire Time Warner. His lack of any evident enthusiasm is perhaps telling. Now, as then, he says a clash of cultures could doom the union, if it survives an anti-trust lawsuit filed in November by the Department of Justice; now, as then, he’s wary of yoking together two vastly different companies; now, as then, he says he’s “cautious,” noting, “It’s going to take longer than people think, and it’s going to be more difficult.”
Does he approve of the merger? He hesitates. “I certainly get the theory of the case,” he says. “It is to some extent an AOL Time Warner redo. [You have] AT&T, a major communication company, but basically a distribution company. What do they need? They need content. So the theory, I get completely.” And the practice? “It can work, but it’s not going to be as easy as the articulation of the concept.” Among the biggest challenges will be the one that faced Time Warner-AOL: bringing together radically disparate work styles, separated by the continental divide that has always separated the entertainment and financial industries.
“When the East Coast tries to invade Hollywood, unless you run the business the way they have run the business, it’s not going to work,” says Parsons, now a senior adviser with Providence Equity Partners. “You can’t apply the same mechanics. [In Hollywood] the talent is preeminent [in terms of getting paid]. AT&T has a totally different compensation philosophy, and it’s not easy to run a business where you have people who get paid enormous sums for what doesn’t seem to be a whole lot of work [from the point of view of] people who climb [telephone] poles.”
Parsons was president of Time Warner when Levin first broached the AOL merger, whose seeds had been planted in October 1999, after Levin bumped into AOL CEO Steve Case while in Beijing for the 50th anniversary of the Chinese revolution. The two started talking and eventually broached the idea of joining forces, thereby linking a prime exemplar of old media with the foremost exponent of new media, the dominant internet player of the era. Some time later, Levin informed Parsons, his deputy, about the plan in a “very hush-hush” way. “It wasn’t completely Machiavellian,” says Parsons, with a smile, “although Jerry could be Machiavellian at times.” The colleagues were a study in contrasts. “In the Japanese idiom,” adds Parsons, “there’s dry people and wet people, and wet people are gushy and warm, and dry people are taciturn and reserved.” If Levin was dry, Parsons was distinctly wet, rather to his credit, “if you think being wet is good,” he quips.
Whatever doubts he harbored, Parsons gave the merger his blessing, which remains a singular stain on his record. “History will record that it was really Jerry’s deal,” he notes, “but at the end of the day I voted for it. I thought we could make it work.”
On Jan. 10, 2000, the two companies unveiled the deal. AOL would buy Time Warner for around $160 billion in a pact valued at $300 billion; a year later the Federal Trade Commission gave it a go-ahead. But it quickly became apparent that the merger was ill-conceived. Its premise — that AOL could charge subscribers for Time Warner’s content — proved misguided, as did the assumption that the internet bubble would never pop. “The value proposition with AOL was, ‘We have a walled garden and you have to pay to get in — and once in, the world is yours, so you’ll be happy to pay us $14.95 a month,’ ” says Parsons. “But the walled-garden model was starting to break down. All these new services were offering content for free. That model just collapsed.”
As it started to collapse, so did aspects of Levin’s private life. He was suffering from the effects of personal tragedy: the 1997 murder of his son Jonathan, 31, a Bronx high school teacher. “Boy, it was tough,” says Parsons. “Jerry was trying to deal with all that emotion. Inside the company, as well as outside, it was great tumult and turmoil, and the fun that he had always derived from this was gone. After his son was killed, he just stayed in his apartment for three or four months. [He said] ‘You take care of things till I get back.’ I would go to his house a couple of times a week just to let him know what was going on.”
In late 2001, Levin summoned Parsons to his Columbus Circle office and told him he was leaving and would recommend him as his successor. There were rumors that another executive, Robert Pittman, would get the job; but the board chose the man nicknamed Huggy Bear. (Levin has since turned his back on corporate life; he’s now involved with health and holistic endeavors and recently acknowledged suffering from Parkinson’s disease.)
“They were looking for somebody who would settle things down and who was basically sensible and had reasonable leadership qualities,” says Parsons.
They went with stability and empathy. They chose “wet.”
He pours a glass of his beloved Brunello di Montalcino, grown and bottled in his own Italian vineyard, a purchase he made almost two decades ago when he envisioned the sort of bucolic retirement that’s eluded him ever since. He swirls the wine, savors it, then sips. With his 6-foot-4-inch height, gentle bass voice and old-school courtesy, he seems born to lead, just as he did when he was called to be chairman and CEO of the ailing behemoth in May 2002, and then had to approve a massive write-down.
“If you ask anybody [about] Dick Parsons, they’ll have lots of different views,” he says. “[On] some things he was a jerk, some things he did all right, some things he settled things down. Almost nobody recalls that I was the CEO who had the largest recorded loss in the history of American corporations. For the year 2002, my first annual report, we took a write-down of $99 billion. Stunning.”
There were other things he did that had long-term benefits, including selling off such assets as Warner Music Group and bringing together the company’s senior executives for the first time in Time Warner’s storied history — “about 300 people,” he recalls. “I said, ‘You lead 75,000 people out there.’ So who did we have come talk to us? [Gulf War general] Stormin’ Norman Schwarzkopf. And Norman was asked, ‘What are your rules of leadership?’ He said, ‘I have two. Rule number one: When put in a position of command, take charge, make decisions. And rule number two is: Do what’s right.’ I tend to subscribe to that.”
In his own life, he pretty much always has; it’s the source of the respect and fondness his former colleagues have for him. But once he fell short, in a much-discussed affair with model-philanthropist MacDella Cooper, who gave birth to his baby girl in 2009. Parsons, who’s been married to psychologist Laura Bush for almost 50 years, acknowledges the pain it caused others and still causes him. He ruminates for some time before addressing the matter. “You can slip into a bit of arrogance — that, somehow, you’re cleverer or you’re more adept, maybe even more deserving of success,” he reflects. “And something like my slip was a rude awakening that you are far away from the paradigm of perfect.”
At Time Warner, his stature nonetheless gave him huge clout, and he moved quickly to promote Jeffrey Bewkes and Don Logan as his deputies, paving the way for Bewkes in turn to replace him in 2008, when he stepped down.
Parsons also dropped AOL from the company’s name; it would be sold altogether a few years later, the final recognition that this shotgun marriage had been ill-conceived from the start. “You couldn’t make them work seamlessly,” he explains. “The disrupters, the new-media people, just had a whole different way of thinking about business, and when you really cut to the core of it, their job was to disintermediate the old-media guys.”
Analysts largely credited Parsons with success, noting he managed to fend off calls to break up the company, while selling its slower-growing divisions. But they also pointed out, when he left, that Time Warner stock was essentially where it had been when he took over. “I always thought very highly of him,” says James Goss, managing director of Barrington Research. “He was the steady hand they needed after the challenge of AOL.” Adds veteran analyst Hal Vogel: “He was persuaded to buy back $20 billion of shares, a horrible use of capital. But he was the right guy in the right place at the right time. Time Warner was a bunch of fiefdoms and he was effective in moving it toward a cohesive management team.”
Parsons’ onetime protege and current Time Warner CEO Bewkes agrees. “Dick taught me a lot about the life of a corporate CEO, but one thing I could only observe was his innate ability to stabilize an organization during unsettled times — and I had a front-row seat watching him achieve that here at Time Warner,” he says. “His magic starts with his own example: He’s calm no matter how bad the news, he understands all the nuances, including the human dimensions, and people trust him because he does what he says he will. He removes the mystery and reduces the ego conflicts. Dick simplified our corporate structure and redesigned our management makeup, at which point investors, employees and business partners were able to buy into the renewed promise for growth and success.”
Throughout, the executive was aware that a clock was ticking, knowing he planned to resign at age 60; he did so on Jan. 1, 2008. “I knew, when I signed my contract, the day I would step down,” he says. “When the first announcement was made [about his promotion to chairman and CEO], I went home and told my wife, and she looked at me and said: ‘Well, congratulations. But they got the wrong guy. You don’t even like the internet. They need somebody more oriented toward the way the world is going.’ “
He glances out the window, perhaps contemplating the way the world once was. He can almost see where he grew up, or would if he could just crane his head a bit farther east. He’s come an unimaginable distance from his start in Queens, where he was raised the son of an electrical technician and a homemaker, a boy bright enough to skip two grades and then coast through the University of Hawaii.
“I was perhaps the least successful student of my generation,” he admits. “I’m actually a type-B personality. I’m not driven. But I am competitive. So if you happen to get into a game, you want to win.”
His competitive vein must run deeper than one would guess from his easygoing charm, but it kicked in at Albany Law School, where he graduated top of his class and was No. 1 among the 4,000 potential lawyers who sat for the New York State Bar — which surprised even him. “We didn’t have any lawyers in our neighborhood,” he says. “When you grew up in the ’50s and ’60s and you were black and had talent, you were supposed to be a doctor or a minister.”
In law school, he met then-New York Gov. Nelson Rockefeller, and when Rockefeller became vice president in 1974, “He asked me to come to Washington as one of his lawyers, so I went to work [in the White House] as general counsel and associate director of what was then the Domestic Counsel.” He remained three years, more than enough for a young man who already had a wife and three kids. (He and Laura have a boy and two girls, one transgender.) “It was the experience of a lifetime,” he recalls, but “I was ready to go. It’s a 24/7 kind of job.”
The rising political star left to join the law firm of Patterson Belknap Webb & Tyler, where he stayed until he was hired to run the troubled Dime Savings Bank, which he turned around so successfully that he was recruited by Time Warner, where he became president in 1991.
It was his connection to the Rockefellers, whose foundation he now chairs, that initiated a long association with the Republican Party, which may be coming to an end. He’s the kind of moderate conservative who readily acknowledges that the politician who’s most impressed him is a Democrat, Bill Clinton. “He was the brightest fellow ever to hold the office,” says Parsons. “You almost can’t measure Clinton’s intelligence.” Parsons voted for Hillary Clinton in the last election.
At one point, there was some discussion of Parsons joining President Barack Obama’s cabinet as secretary of commerce, but that was nipped in the bud when he was diagnosed with multiple myeloma; he is now in remission, following a stem cell transplant.
He admits of President Donald Trump, whom he knows well, “I’m not a huge fan. He is, by almost any measure that you want to identify, ill-equipped to be the president of the United States. He doesn’t know what he doesn’t know. He’s clueless in terms of things he is ignorant about and thinks he knows things he doesn’t.” But is he good for corporate America? Parsons comes as close as he ever will to throwing up his hands in exasperation. “He’s not good for any America.”
If the executive had been younger, perhaps he too would have run for office; if not for the myeloma, there was speculation he might become mayor of New York. Instead, 10 years after he left Time Warner with a view to retire — after getting sucked into stints at Citigroup and the L.A. Clippers, both of which he brought back from the brink — he’s at last easing into a semi-retirement, even if it involves a host of commitments, from the Rockefeller Foundation to the Apollo Theater in Harlem to various educational charities and investment endeavors.
Only now, about to turn 70, with no compelling calls of duty, is he truly free to do what he wants, if he can ever make up his mind. “So far,” he says, his eyes twinkling, “I haven’t figured what that is.”
A version of this story first appeared in the Jan. 31 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.