AOL TW'S PARSONS SEES TURNAROUND AT AOL THROUGH CABLE
NEW ORLEANS -- AOL Time Warner CEO-Designate Richard Parsons predicted problems at company’s struggling online half, AOL, would abate in latter half of this year as ad dollars began to bounce back. “We still have faith,” he said at NCTA convention here Mon. He predicted that merger of AOL and TW ultimately would be seen by Wall St. as “greater than the sum of its parts.” He denied company was considering splitting off AOL, although he admitted that he and other company executives had to “answer some serious questions about AOL.” He also conceded that at time of merger, executives might have set unrealistic expectations for what deal would produce. “We're probably being justifiably punished for being too exuberant,” Parsons said, referring to AOL TW’s battered stock price.
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Insight Communications CEO Michael Willner said his company was in negotiations with AOL TW to carry AOL on its pipes as one of multiple ISPs. Some Wall St. analysts have wondered aloud about AOL’s future with only Time Warner cable system carrying it. But Parsons told us in interview that he expected Insight wouldn’t be AOL TW’s only announcement on ISP carriage. He said he was in negotiations with several other MSOs and expected to cut deals soon.
Parsons also predicted that he, Comcast Pres. Brian Roberts and AT&T CEO Michael Armstrong soon would resolve questions on how to dispose of AT&T’s 25% stake in Time Warner Entertainment. Comcast and AT&T Broadband are seeking regulatory approval for their proposed merger, and Comcast has said from beginning it didn’t see AT&T’s TWE stake as strategic asset. In recent weeks, Parsons has said he’s considering putting it out as IPO, but didn’t offer any details Mon. Instead, he repeated his earlier statement that resolution would “necessarily involve writing a big check.” He said he, Roberts and Armstrong were trying to think creatively about liquidating that stake. Parsons also said his company remained in negotiations with Newhouse to keep latter’s partnership with AOL TW on cable intact.
Roberts lamented how long it took to actually consummate merger, which he had said in past could take up to year. Asked whether industry would see more consolidation, Roberts said he personally believed there always would be more. For moment, he said, his company was focusing on finishing its deal with AT&T and forming partnerships with consumer electronics (CE) manufacturers and retail companies to ensure that those who bought HDTV sets at Circuit City, for example, also would receive cable box. Willner predicted more consolidation, but joked about possibility of his own company’s being involved. He urged broadcasters and CE companies to work with cable on DTV transition before govt. stepped in: “Having it be voluntary is better than having it done to us.” He also said his company was trying hard to resist price increases, again in part because of fears of govt. intervention: “We need to solve these issues clearly in the boardroom and not in the Beltway.”
Willner said he wasn’t surprised that DBS had captured more than 20% of market for multichannel video service, but said threat from satellite wouldn’t affect how he did business. Cable is fighting back by providing high-speed data, telephony and other services, he said. Roberts also said his company was working on unique cable phone service, such as offering voice mail that could be delivered to PC.
Later, at news conference, panelists were asked about Adelphia, which has struggled amid SEC investigation over its off-balance sheet debts. “I don’t think anyone has adequate insight,” Parsons said. Roberts said he thought situation was unique to that company. They also were asked about carriage battle between Cablevision and Yankees & Sports Entertainment Network (YES). Willner said he believed sports programming was “spiraling out of control” and it was more than just cable, involving ticket prices, player salaries, etc. Roberts said his company approached sports programming on case-by-case basis but said he sympathized with what Cablevision was experiencing: “This is an incredibly perplexing call.”
NCTA Pres. Robert Sachs said in introduction that 13 members of Congress were attending, as well as NTIA Dir. Nancy Victory, and all 4 FCC commissioners.
House Commerce Committee Chmn. Billy Tauzin (R-La.) opened NCTA convention by sauntering on stage with jazz band playing “When the Saints Come Marching In.” He threw necklaces of Mardi Gras beads to audience and danced some before turning to matters at hand. He welcomed NCTA to city run by “cable guy” Ray Nagin, new city mayor who is former Cox cable gen. mgr. He also thanked top-10 MSOs for recently committing (CD May 2 p1) to FCC Chmn. Powell’s DTV transition plan. “You're doing your part, and I want to thank you for that,” Tauzin said. He also said he and allies in Congress “want to protect you from those who want to regulate you to death.” Line drew round of applause.