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his wide embrace
Wraps arms around AOL team, amid the bad #s
By Jeff Bercovici
Speaking to investors for the first time Monday in his new capacity as AOL Time Warner's CEO-designate, Richard Parsons brought to mind an aphorism about barnyard fowl and the appropriate time for counting them.
Parsons was expected to use the conference call to slash the company's estimates for 2002 earnings, and that's just what he did, revising what had been a projected double-digit increase in earnings before interest, taxes, depreciation and amortization, or EBITDA.
But more interesting, perhaps, was the way that he seized on the occasion to stroke some egos that may have needed it.
Parsons has a reputation for being a skilled mediator and conciliator, and that aptitude was on display Monday. His delivery was offhand, but there was shrewd purpose in his professions of respect for Robert Pittman, formerly his co-COO, and the prominent mention he made of Ted Turner, who just a few weeks ago seemed likely to leave the media conglomerate altogether.
Parsons did not use the talk to preview cost-cutting measures such as layoffs.
Introducing his chosen successor, Gerald Levin, who is scheduled to step down in May, tried to put the best face on the bad news that investors knew was coming.
"In what has been the weakest advertising market in memory, our online and other advertising businesses performed quite well, certainly on a relative basis," said Levin. "The company's financial results for 2001 were strong given the current environment, particularly versus industry peers."
Still, said Levin, "With the depth of the advertising recession, our full-year targets proved too high."
Parsons continued this theme in his own remarks.
"Last year, we made certain economic assumptions and then ran right into a major advertising recession," he said.
"We got no credit for our achievements because of the high expectations we ourselves created.
"Our assumptions regarding future economic conditions will be more conservative. We will try not to overpromise, and we will deliver."
Accordingly, in generating its revised outlook for 2002 earnings, AOL Time Warner assumed that there will be no recovery in the advertising market this year, said Parsons. Most analysts believe there will be some kind of recovery in the second half of the year.
The new estimates project revenue growth for the company of between 5 and 8 percent. Projected EBITDA growth is 8 to 12 percent, with no EBITDA growth at all in the first quarter.
Parsons balanced out the bad news by citing the company's success last year in attracting new customers to its subscription businesses, in extending the reach of its broadband internet services, and in increasing its presence overseas with the acquisition of AOL Europe and IPC Publishing.
He said that AOL Time Warner's investment priorities this year will be new services, including video on demand and AOL Music, and the expansion of its international holdings, especially AOL Europe.
January 9, 2002 © 2002 Media Life
-Jeff Bercovici is a staff writer for Media Life.
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