Interview Date: Tuesday June 24, 2008
Interview Location: New York, NY
Interviewer: Tom Umstead
Collection: Cable Center Collection
UMSTEAD: I'm Tom Umstead from The Cable Center and we're here with Dick Parsons, Chairman of Time Warner. How do you do?
PARSONS: Tom, nice to see you.
UMSTEAD: Nice to see you. First, let's clear the air a little bit. Do you we know exactly when you will officially step down as Chairman of Time Warner?
PARSONS: Not exactly. We have a sense of it and some plans and we've been constantly talking to our board and Jeff Bewkes, our CEO, but it hasn't finalized yet to a point where you have to make disclosures and that sort of thing.
UMSTEAD: When you finally walk out the door as Chairman of Time Warner, do you feel that you will have accomplished everything that you wanted to accomplish when you first walked in as Chairman?
PARSONS: No. There are some things... it's like anything else in life, these are always works in progress and there are some things that I would have liked to have done or seen done that just haven't gotten to the goal line yet, and then there are some things that got done that we never anticipated would need to get done. So it's been a mixed bag but there are a few things that if I could sort of make the world turn out the way I wish it would turn out that we'd still get done in the next several months here.
UMSTEAD: Anything in particular you can talk about?
PARSONS: It falls into two areas. Number one, I've felt and maintained for some time... well, let's start with the people side because I frequently say around here, and it's because I mean it, it's all about people at the end of the day. We had put in place some development people managing human resource tracking and systems that would put some flesh on the bones of the process of emphasizing the importance of your people and their importance to the enterprise, and making sure you know where the talent is, and that the talent knows that you know where they are and appreciate what they do. That you have good management development not only processes but training in place so that you're investing in your people and helping them be the best they can be, and in turn their loyalty to and commitment to the collective enterprise is heightened. We made a lot of progress in that area but there's still some distance to go and hopefully I'll be around to see it, I just may not be around in a titled position. So that's one area where I would have liked to see more progress. And the other is, I think that this is a great company that is not only great reputationally but great in terms of the value, the store value, in Time Warner. It's not only the world's largest and most profitable, but I think most valuable media and entertainment company and I'd like to see the market recognize that a little more, and I just think that's going to take a little more time.
UMSTEAD: Growing up as a young kid in Brooklyn, New York, did you ever in your wildest imagination believe that you would become a successful lawyer and end up running a multimedia conglomerate such as Time Warner?
PARSONS: No, I thought I was going to be a cowboy while we still lived in Brooklyn, and then I thought I was going to be Willie Mays when we moved to Queens, so I always thought, as a boy growing up I tended to think in terms of – well, once I got past the cowboy stage – athletics. It wasn't until I was a senior in college that I focused on going to law school, and it wasn't until Jerry Levin asked me if I wanted to leave the bank that I was the chairman of to come over here to be president of Time Warner that I thought about being a media executive. So these things just happened. It's not as serendipitous as it may sound, but it was not the result of a plan.
UMSTEAD: From what I understand, you graduated from Albany and then moved on and worked for Mr. Rockefeller for a time, and then moved on with him to Washington D.C. when he became Vice President. At the time, did you have any political aspirations for yourself?
PARSONS: No, not really, not really. It was actually quite by serendipity or accident that I ended up working for Nelson Rockefeller, who was Governor of the State of New York when I was in law school. I had an opportunity to go to work in his offices as a kid lawyer, is basically what it was, and over the course of the years when he was still Governor and I was working in the offices, we actually developed an interesting personal relationship. He obviously – well, it wasn't obvious at the start, but it became so at the end – he liked me and I liked him. So he would include me more and more in some of these road shows he would do and when he became Vice President he asked me if I would come to Washington to work with him as Vice President. So my first 6-7 years out of law school was spent in a political context but not because... I never thought about being a politician myself.
UMSTEAD: Do you have any aspirations going forward?
PARSONS: Not for publically elected office. It's too hard for too little yield in my judgment.
UMSTEAD: Going forward, you were Chairman and CEO of Dime Savings Bank, and then you go on the board for Time Warner at the time eventually moving into the president's position, and then Chairman and CEO of then AOL Time Warner. At the time, the company was in a little bit of chaos, a little bit of financial difficulty. What did you see in the company and also in your self that allowed you to believe that you could turn it around?
PARSONS: Well, you know what they say about the media and media coverage, you're never as good as you're reported to be when the cycle is up and you're never as bad as you're reported to be when the cycle is down. I think I would say that that was certainly true about Time Warner, or as it was called, at AOL Time Warner. On the backside of this "worst in corporate history" merger – and it was certainly from a financial perspective a pretty disastrous merger. Time Warner ended up merging with AOL right before the internet bubble burst in 2000, 2001, and literally hundreds of billions of dollars got evaporated in our merger. And so the media jumped on this thing and the general perception in the marketplace was that this was a total disaster, a total meltdown. In point of fact, the Time Warner constituents, if you will, the companies that came to the merged entity through Time Warner were all still in pretty good shape with the exception of our music company, which was not in disastrous shape, it's just that it was in an industry that was about to undergo significant change. So the real focus from my perspective as a manager in terms of what we needed to fix was the AOL side of the house because the rest of the house was actually still in pretty good shape. The extent of the difficulties were, I think, somewhat overstated in the popular media and by investors who were just seeing, as I said, hundreds of billions of dollars sort of evaporate into the ether. Now, it got compounded when the SEC and the DOJ jumped in, again, out of facts and circumstances that came, really out of one quadrant – well, it wasn't even a quadrant, one sector of our combined conglomerate world, which was AOL. But in theory it threatened the entire corporate enterprise. Managing through something like that was something I'd already done before at the Dime, and so long as the underlying business was sound and as long as we could continue to make money, pay our bills, keep the door open, the rest of it was just kind of like going through the swamp, or as Winston Churchill said, "Going through hell," but he also said, "When you're in the middle of hell the only thing you can do is keep going." So that was the challenge, just to keep going until we got to the other side.
UMSTEAD: What do you consider during that time period, from then until now, your greatest accomplishment at Time Warner?
PARSONS: You know, it would have to fall in the range or perspective of persistence. That's what we did, we just kept going. Probably that... So there were a series of challenges in front of us, any one of which if badly handled or if you just sort of gave up on it, could have toppled the company. But if you just kept at it, kept your head about you and your wits about you and kept moving in a positive direction because the underlying business was sound you'd get to the other side. So that, and then I think just getting everybody in the company refocused on succeeding as opposed to being sore about the fact that if you were old Time Warner, came from a Time Warner legacy company you were upset because your stock options had become worthless and your 401Ks had gotten crushed and it was all because of those bad people at AOL; and if you were at AOL they had been on a trajectory, they were the most successful company in America in the decade of the '90s in terms of stock price appreciation, and somehow the music stopped and you tend to blame not yourself but somebody else, not circumstances. So there was a lot of unhappiness at the time, and just getting people past the unhappiness and focused on how we were going to succeed together was important and we at least got that done.
UMSTEAD: In terms of the cable industry itself, you were a newcomer when you basically came into Time Warner, no?
PARSONS: Not exactly. My first involvement with what was then called Time Inc., prior to the merger of Time and Warner was in 1985, and I went on the board of a movie company that was being spun out into the public called Tri-Star, and I was on the Tri-Star board for a couple of years, and then Tri-Star was taken private by one of the partners. Then Nick Nicholas, who was then the president of Time came and asked me if I'd go on the board of ATC, American Television Communications Company, which was Time Warner's cable company. At that time it was a separately traded public company called ATC, or American Television Communications, but it was 82% owned by Time. So it was a Time subsidiary cable company. So I was on the board of the cable company and got to know a lot about the cable industry between 1987 and 1990 when Time and Warner came together and merged, and then I came on this board.
UMSTEAD: Where I was headed with the question is with the way the cable industry is now compared to what it was then, would you have ever imagined it would have gotten to this point?
PARSONS: Actually, yes because the guys were talking about a lot of the things that we see today in the late '80s and early '90s. The impact that digital technology was going to have on the cable business, the creation of that whole hybrid fiber coaxial architecture which was born in Time Warner Cable which was then called ATC, I was on the board at the time and we talked about it and what its implications for the future were, that cable was one day going to become more than just a video programming and delivery service. It was going to become a full-fledged telecommunications platform. People were talking about it back in those days but it was still far off in the future. But there were those around – Joe Collins and Glenn Britt in our company, in particular, at that time – who had the vision in their heads.
UMSTEAD: In terms of Time Warner and its vertically integrated company, it was pretty much a new format at the time and you guys perfected it going forward with HBO and several other entities on the programming side as well as the distribution side. Today, what would you say is the most important component of the cable industry? Is it the content or is it the pipeline that delivers that content?
PARSONS: I think that in its day the notion of vertical integration... the way that I always thought about it was, because I'm simple-minded, from manufacturers to wholesalers to retailers, and we had manufacturers in terms of our movie and television companies that were creating product; we had wholesalers in terms of our cable networks that were taking not only the product we created but others and creating a bundled, if you will, offering that had real breadth to it; and then retailing and delivering it to people through the cable company. So, as you know, the decision's been made now to sort of spin the cable company off and let it be on its own, so why is vertical integration no longer that important, and it's because, I think, in order for cable to realize its full destiny it needs to be on its own bottom because again, now, it's about delivering more than just the products that we and similar entertainment companies manufacture, namely TV signals into the home or even movie signals into the home. It's about voice and it's about data, importantly. And so, as I said, it's a full-fledged telecommunications platform, delivery platform, and therefore it needs to have the sort of financial characteristics and aspects and flexibility of other full-scale telecommunications enterprises if it's going to be able to succeed and compete, or compete and succeed in the 21st century.
UMSTEAD: Having said that, five years from now, if you could take out your crystal ball, what is Time Warner going to look like? Any idea?
PARSONS: Well, Time Warner is probably going to be a company five years from now that now longer has the cable or distribution arm that it has had for the last 15 years but that will still be focused on creating movie and television product and internet content. Whether the magazines are in or out, I can't say. I would think that the publishing arm would still be a part of it because all of these content creating enterprises are finding their way into the digital space. They're finding their way into using the creativity and skills that they've had in making either magazines or movies or television shows, using those same skills to create digital content that travels through the internet and enables people to access them that way. So I think the content still fits together.
UMSTEAD: You've been known as sort of a diplomat in terms of making deals.
PARSONS: Who said that?!
UMSTEAD: A lot of people have said that!
PARSONS: Show me the guy!
UMSTEAD: Making deals and being a behind the scenes calming effect in deals and negotiations. Do you think that congenial style that you have will positively or negatively affect your legacy and do you believe that you'll get the credit that you deserve for all of the accomplishments that you've had?
PARSONS: You know, I don't think about those things really. My view is you are who you are. Most people, I daresay probably everybody is capable... Your best self is the self that is consistent with who you really are. So if you're trying to pretend you're somebody else you're going to fail at that as compared to just being yourself. So I'm not affected in any of that behavior because I thought it was tactically or even strategically optimal at a point in time – it's who I am. The other thing I'd say is you try and do your job, right? You do the best you can, you give it your best shot and you move on. I haven't really thought about how all that plays into your legacy. That's out of your hands anyway, whether you get the credit you deserve. I was well-compensated and looked after when I was here, and so when I leave, I leave with no regrets.
UMSTEAD: When you do leave, you will be leaving as one of the most important and also most prominent African American employees, executives, in the cable industry. In your estimation, how far as the cable industry come with regards to diversity, particularly employment in the executive ranks?
PARSONS: I think the cable industry like American industry in general has made great strides from when I first started out in law and business 35 years ago in terms of being more inclusive, more a true meritocracy, and more reflective of the diversity of its customer base. That said, I think there's still a ways to go. I think the cable guys get it – I shouldn't say guys now, I should say the cable guys and gals get it. That the real competition now, who's going to win and who's not, depends on the talent you're able to bring to your party, and talent is randomly dispersed across humanity. It sexists in every race, every color, every creed, every gender (of course there are only two), and so the effort in the so called war for talent, the effort has to be to cast as wide a net as you can and find talent where it exists, and I think that's going to be the thing that enables the cable industry as well as American industry in general to get to the last rung on this ladder because they're going to recognize that at the end of the day it's the talent that matters and let's go get it wherever it is.
UMSTEAD: How about your efforts within Time Warner? Are you satisfied with the diversity within Time Warner?
PARSONS: No, because we aren't where we ultimately need to be. I think we've made some pretty good strides. Obviously you can't manage what you can't measure, so we measure all of these things. We have our statistics; we don't have hard quotas but we have goals and we have objectives and in all the measures we have that are reflective of the diversity of our workforce, of our vendor relationships, of our philanthropy, of the content that we put out, and of our investment activity in terms of investing in the enterprises of others, across all five of those spectrums we have seen improvement over the last 5-6 years, so that's a plus. Are we in the end zone; are we where we need to be? Not yet.
UMSTEAD: What's next for Mr. Parsons?
PARSONS: Don't really know. I will tell you this, I have a new grandson, see, so somebody's got to give that young fella some guidance. I'm having a lot of fun with grandkids. Grandkids are much better than kids. Much, much better. What I will do next other than pursue some personal things that have always been on my agenda, that I've always wanted to do but never had the time to do – we can talk about those in a minute – I don't know. I'm not up for running another public company. Right now my hope is that I'll find something in the education space that really can absorb a lot of my time and attention because I'm a big believer in education. I think it's the sine quo non to self fulfillment in the 21st century. You just don't have a shot going forward if you don't have skills, and the way you get skills is through the education process.
UMSTEAD: And you mentioned some other things that you'd like to...
PARSONS: Oh, there are some personal things... because this is kind of a transition year for me, being chairman is fun but it's not as demanding and consuming of your time as being chairman and CEO. So I've had a little bit more time and one of the things that I'm doing, I've always wanted to be a jazz disc jockey, so I'm working with a local radio station starting to put together a little jazz program that will be aired on Sunday nights just to sort of cool everybody out. So I'm very enthusiastic about it because I love music and it's a dream that I've had for a long time, just never had time to pursue it. And I'm doing a few other things, looking at some properties in the Caribbean, maybe putting a house down there, that sort of thing that are time limited but that are just sort of fun projects. In terms of what I would do next of scale, as I said, I don't really know but I would hope to find something to do around the education opportunities, maybe not full time but that would be significant, make a contribution.
UMSTEAD: Where do you see the cable industry moving over the next five years given competition and given everything that's chasing it at this point?
PARSONS: The cable industry – as we were talking earlier – it's changed into something that it wasn't. It's metamorphosized, if you will. When I started out with it, going on 20 years ago now, about 20 years ago, it was just about delivering television signals and packaging and delivering them to a home. It's now about delivering anything that can be delivered digitally in the form of bits so that it's not only video, but it's voice and it's data into the home, and then there are going to be wireless extensions around that. I think the prospects are bright for cable. I continue to be a believer; I've always been a cable bull. I continue to be a cable bull because they have so many advantages. One, they have the advantage of incumbency. They have the customers. And having been in consumer businesses before... I remember when I was at the bank, you had to run somebody off with a gun in order for them to stop being a customer. They'd have complaints – they didn't like this, they didn't like that – but they knew the bank, they were comfortable with their people, they knew even how to effectively complain, and if you told them, "Sorry, I can't help you. Go find another bank," they'd say, "No, no, this is my bank. You've got to fix it." People don't like to leave a relationship that they've had that has basically worked for them, and that's what cable has. It has the advantage of incumbency. Secondly, it has currently the superior platform. Now, what wireless will do to all that in the fullness of time, I don't know. I suspect the cable guys will keep up with it, but the fullness of time could be another 10, 15, 20 years. So not only are they the incumbent player, they've got the more robust platform plus – and this is probably the biggest change – the cable industry has stepped up the pace of innovation. Every time they're being chased by others they're staying ahead of others because they continually innovate off of that more robust platform. So they're offering more and better services in video, voice, and in data. And so it seems that's a pretty hard combination to beat. So I like cable's hands. I see them continuing consolidation because in order to be both competitive on a sort of geographic basis, you have to have enough scale to generate the kinds of revenues that you can then invest in advertising and marketing and innovation, and bring down the costs of your infrastructure. So I think there'll be more consolidation, but I definitely think there will be a couple of three big cable competitors out there for beyond the foreseeable future.
UMSTEAD: Having dealt with America Online and seeing the changes in the web space, where do you see the future of that arena, and is that a serious competitor to the cable industry with regards to content?
PARSONS: You know, one of the things that's going to drive continued growth in cable is because the bits got to get there somehow, right? And I don't see wireless technology developing to the state of robustness that in the next 5-10 or even 15 years it really will essentially "overbuild" the wired platform. The wired platform is always going to be more robust, at least in my lifetime, in the wireless platform which means you're going to be able to offer more with greater certainty and greater speeds. So as long as the bits got to get there some how, as long as the wire line platform – whether it's the phone company or the cable company – is going to be the preferred method of delivering the bits, cable's always going to be in the transportation business and then it's a question of how they innovate around the delivery of those bits, whether it's voice or video or data, to put other services and bells and whistles on it as to how they fare against the other wire line deliveries. So I think actually... the internet is one of the fastest growing products we've had at Time Warner Cable over the last half a dozen years has been high-speed data business because what it's doing is it's bringing the web into people's houses.
UMSTEAD: Video on-demand and other services that are on the digital platform as well have been driving the cable business going forward.
PARSONS: Cable – and I guess we should do a little commercial for cable here since this is, after all, sort of a cable underwritten enterprise – cable should do very well going forward because in all of their businesses I think they have advantages that their competitors don't. In the video side, the satellite's all digital, a lot of the cable is still analog and satellite has some interesting packages that they offer, but they aren't going to be able to offer – at least for awhile – the real killer app, which is VOD, which is the ability to sort of manipulate the video to your liking and in the way you want which cable can do. So one of the things we've been trying to do in our cable network side and our movie side is to convince everybody to put the whole networks out there on a VOD basis like HBO has been doing for years because consumers like that and it's not replicable by the satellite guys. On the voice and data side, again, the fiber coax architecture gives more speed, more robustness for the data than the competitive offerings currently by the telcos, and cable which is the newest entry into the voice business, they have the ability to bundle everything, bundling the first two offerings with a third with an interesting voice offering is giving them the advantages of convenience. So, as I say, I'm a big bull on cable.
UMSTEAD: Just a personal question – anything that keeps you up at night?
PARSONS: Not really. There have been two times in my business career where I've lost a night's sleep over what was going on in the business, but you know, if my wife and children are well, I'm usually in pretty good shape. Those are the things that are most important to me. There have been a couple of instances where, as I said, I've lost a night's sleep over what was going on in the business, but only a couple of times.
UMSTEAD: Is there anything I missed that you may want to add regarding Time Warner, the cable industry, or your future?
PARSONS: Well, regarding my future, no, because I've told you what I know which is that right now I'm in sort of chill mode. People ask me all the time, well, you must have a plan, you must want to go in some direction, and you're just not telling us. Not true. My son had it best. He said, "What are you going to do next, dad?" I said, "I don't know." He said, "Well, don't worry about it. It will find you." I believe that. Regarding the cable business, we've had an opportunity to talk about cable. I just think it's a very dynamic, high-growth, and ultimately high return – that's always been the issue with cable, when are we going to start seeing the returns because all the money went back into continuing to build the plants and enhance the capacity, but I think it's ultimately a high return business and I'm very bullish on its future. And regarding Time Warner, I think... at a point in time, at the right point in time, I'll be happy to give my valedictory to my colleagues and thank them because at the end of the day – when you were asking before was I ever worried about the company – no, we have 90,000 men and women who basically know what they're doing, who run these businesses as best in class businesses and have done a terrific job and could be counted on to make me look good, and they did so I'm grateful to them for that.
UMSTEAD: What would you say to those who are watching this and want to emulate what you've done here in the business and want to get involved in the cable industry?
PARSONS: Well, one, I would say the cable industry is certainly a good place to think about being because it's dynamic, it's growing, and it's still a business of the future, not just a business of the present and it's not a business of the past. It's a business of the future. And generally speaking, I would say to young people what I have said to them out on the road, there's no formula to how to be successful, but there are building blocks and I don't profess to know all the building blocks but I know three. The first that I always tell young people is believe in yourself. If you have a dream believe that you can do it. Woody Allen said it best, "80% of success is showing up." Believe in yourself, go for it, take the shot. Two, you have to have skills when you come into the workplace. There have to be things that you can do that add value, and the way you get skills is through education. So push that as far as you can as hard as you can. The third is simply just outwork the other guy. Success is a whole lot of perspiration. So those would be my suggestions to young people who are thinking how am I going to get ahead in this world. Believe in yourself; get a good education, develop the best skill package you can; and then work as hard as you can.
UMSTEAD: Again, you've been known for being a diplomat and having diplomacy, skills that are not en vogue these days, unfortunately. What do you tell some students who say, well, this is not the way we've seen other people get ahead. We need to be rough, we need to be aggressive, we need to be anything but diplomatic. How do you address questions like that?
PARSONS: That's a softer subject, but I always remember something my grandmother told me. My grandmother was a religious woman and she was always quoting the bible to us, to her grandkids, and one of her favorite sayings was, in essence, you reap what you sow in this world. It turns out grandma was right. You reap what you sow. You get out of this world basically what you put into it. So if you are respectful of other people, if you try and understand the other guy's perspective or the other gal's perspective, if you try and treat people with respect, as I said, that's what comes back to you at the end of the day. It is not true that nice guys finish last. In the main, good people finish in a good place. Another way of thinking about it, it's the only time I quote Steve Ross. Steve Ross was my predecessor in this job once removed – Steve, then Jerry Levin, then me. When I first joined Time Warner, Steve said to me, "Dick, as you're dealing with folks out there in the industry keep one thing in mind. It's a small business and a long life. You're going to see all these people again and what do you want them thinking when you see them again? Just treat people the way you want to be treated."
UMSTEAD: Thank you very much for taking time out to talk to us.
PARSONS: My pleasure.
UMSTEAD: It's been a pleasure. This is Tom Umstead from The Cable Center. Good night.