Bewkes Takes Over Time Warner

The man who ran HBO for seven years, Jeff Bewkes, will have a host of new challenges on his plate beginning Jan. 1 when he assumes control of Time Warner Inc.

Sometimes seen as a lumbering giant in a world of rapid technological change, Time Warner’s shares have been stuck in neutral for the past five years. Questions are still swirling over how a major overhaul at the company’s AOL unit will work out, and many still see the company has having too many parts, even after several have been sold off.

While the expectations of Bewkes are high, he has given little indication publicly about his exact plans. A spokesman said Bewkes was preparing for Time Warner’s earnings announcement on Wednesday and wasn’t available for an interview.

In a prepared statement, Bewkes said: “We have a lot to do, and I’m intensely focused on building shareholder value.”

In his five years at the helm, Parsons did much to streamline Time Warner’s structure, which had often been criticized as too complicated. He pared debt, unwound a clunky joint venture with Comcast Corp., sold off a half-interest in Comedy Central as well as Warner Music Group and a book publishing division.

The sprawling company is still the largest media conglomerate in the world, with interests in magazines such as People, Sports Illustrated and Time; movies, with Warner Bros.; a suite of cable networks including HBO, CNN and TBS; AOL, and the nation’s second-largest cable company, Time Warner Cable.

There is little doubt that Bewkes will be willing to move aggressively. The 55-year-old executive helped transform HBO from mainly a movie channel into a hugely profitable network that also consistently won critical acclaim with original shows such as “The Sopranos” and “Sex and the City.”

One possibility could be a further reduction in Time Warner’s stake in its cable division. The company sold about 15 percent of Time Warner Cable to the public, but speculation has frequently circulated that it would further reduce its stake or sell other businesses.

Parsons, who is 59 and one of the most prominent black executives in corporate America, will stay on as chairman. He had taken over in 2002, just as the company was reeling in the aftermath of its disastrous purchase by AOL.

A former lawyer and skilled negotiator, he helped restore the company’s stature and rebuild its relations with Wall Street. He also fended off a challenge from the activist investor Carl Icahn in 2006 to break up the company.

While an outright breakup may not be in the offing, investors are hoping Bewkes will take bold steps to revive the share price. And while a turnaround at AOL seems to be making progress for now, it’s still not clear what the long-term plan for that property is.

Bewkes had long been groomed as Parsons’ successor, with only the exact timing of the changeover to be finalized. Bewkes was named to the Time Warner board this year, and took the title of chief operating officer two years ago.

Early in his career Parsons worked as a lawyer for Nelson Rockefeller, a former Republican governor of New York, and in the Gerald Ford White House, giving him a firm grounding in politics and the art of negotiating.

In the years following his ascension to the top job at Time Warner, Parsons managed to get past much of the tortured legacy of AOL, and the company eventually removed “AOL” from the front of its name.

The grand synergies promised by the AOL deal never materialized. The company had to take multibillion dollar write-downs, and later settled shareholder lawsuits and federal investigations stemming from fraudulent accounting practices at AOL that appeared to inflate revenues.

Time Warner’s credibility had been battered after it failed to deliver on aggressive financial goals and promised various synergies from AOL’s online expertise and Time Warner’s media properties. Parsons helped restore Time Warner’s reputation on Wall Street by scaling back on promises and making more realistic forecasts.

The stock went on a downward spiral from the $47 level it saw in January 2001, when the deal closed, and stayed under $20 a share until late last year, wiping out billions in shareholder wealth. After struggling above $20 for several months this year, it fell back below that level in July, and edged down 7 cents to end at $17.81 Monday.

While Parsons has a smooth, diplomatic style that served the company well during its struggle in the aftermath of the AOL merger, Bewkes is more of a hands-on business operator.

Bewkes joined HBO as a marketing manager in 1979 and steadily worked his way up the ranks, helping build the cable channel into one of the most successful and best-regarded media businesses in the United States.

Personally, the two men also have different styles. Parsons is tall, full-chested, sports a beard and an easy laugh. He owns a winery in Tuscany called Il Palazzone (“The Big Palace”), which makes highly regarded red wines. Bewkes is also tall but lean, focused, and has a penetrating gaze.

Bewkes has taken a prominent role in overseeing one of the most important transitions going on in Time Warner today, AOL’s shift from a subscription-driven business to a public Web site that derives income from building traffic and selling advertising, much as online portals such as Yahoo Inc. and Microsoft Corp.’s MSN do.

Speculation has also centered on whether Parsons would run for mayor of New York in 2009 following the departure of Michael Bloomberg. Parsons has said he wasn’t actively considering it but hasn’t ruled anything out.