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February 28, 2006
Parsons Triumphs
Time Warner CEO, Dick Parsons, triumphed last week when he met with Carl Icahn and got the pesky corporate raider to drop his attempt to have an alternate slate of directors elected in return for some concessions--primarily to cut corporate overhead and buy back about $20 billion in Time Warner stock. Parsons won big time. Here's why:
By keeping calm and not getting into a name-calling gutter fight with Icahn and Wasserstein (who were both certainly down below street level), Parsons came across with this reputation as a superb leader, diplomat, and politician enhanced. Icahn got what he always wanted--some action that might get the stock price up. Breaking up Time Warner into pieces was not the way to do it, Parsons knew it, and didn't cave in.
The biggest triumph was that Parsons gave up what he most probably wanted to do any way--cut corporate overhead and buy back stock, especailly cut overhead. However, Time Warner is notorious for being a conglomerate of fifedoms run by strong willed, ego-centric, me-first, imperial executives who would take down the entire company in order to keep their perks and their empires intact and under their thumbs.
Parsons is a superb diplomat and he knew that if he tried to cut overhead, which was clearly necessary, he would face a revolt of the barons of the Time Warner silos. Therefore, when Icahn came along and started screaming about reducing overhead and breaking up the company into four separate autonomous companies, he played into Parsons's hand. Now Parsons could go to his barons and say, "Look, we may lose our power and fifedomes if Icahn is successful. Help me cut overhead so we can maintain power and control. Imagine how it would be working for Carl Icahn--he'd want to personally sign your expense accounts."
Rather than lose power and most of their perks, the barons fell into line and agreed to some cuts: a fewer corporate jets, fewer lavish parties, and fewer trips to Europe--anything to avoid working for Icahn or Frank Biondi.
Parsons proved he is no dummy. Maybe his next gig will be, as the NY Times suggested, mayor of New York. He'd be a good successor to Bloomberg and a lot taller.
Posted by Charles Warner at February 28, 2006 11:38 PM
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