EW ORLEANS, May 6 — Richard D. Parsons, who will become AOL Time Warner's chief executive later this month, said today that the company still faced significant problems and still had to answer questions about its strategic direction. But he vigorously defended the overall vision for AOL Time Warner, the world's biggest media company, and said there were no plans to split the company.
"We're the No. 1 movie company, the No. 1 online company, the No. 1 premium cable network company, the No. 1 cable network company, No. 2 cable company, No. 2 music company," he said here in a panel discussion at the cable television industry's annual convention. "What am I missing?
"All of these businesses are roaring, with one exception, no question," he said, referring to the struggles at the America Online Internet division. Using industry jargon for slow and fast connections, he added: "What we've got to do is answer some serious questions around AOL. What is the future of narrowband? Is this a medium that has a long-term advertising future and if so, at what rate can we expect growth and how will it migrate to broadband? Those are legitimate questions which we're focusing on now in the company."
Shares in AOL Time Warner have lost much of their value since America Online completed its acquisition of Time Warner in January 2001. Much of the decline was attributed to a loss of confidence in company executives as they reiterated aggressive financial goals and then failed to meet them.
Shares fell 80 cents yesterday, to $17.25.
Mr. Parsons acknowledged that today, saying, "To a certain extent we were hoist on our own petard." He also discussed some tactical challenges, in addition to explaining broader strategic issues.
"There was, is and will be an execution issue that we have to deal with," he said. "The execution issue that remains is: `How do you get the parts to work in such a way that the whole is greater than the sum of the parts?' "
In that sense, even as he explained a challenge for AOL Time Warner, he defended the overall vision, which is to link the new media with the old. Some have questioned the strategy, including a group of Harvard Business School students who recently won a case-study competition sponsored by Goldman, Sachs. The Harvard group suggested that AOL Time Warner should essentially abandon the effort to unite the new and old media and instead focus on running its various units more or less independently.
"I'm always grateful for whatever help I can get from the press, or a bunch of business-school students, whatever," Mr. Parsons said dismissively.
There is really no analytic reason, he said, to think that breaking up the company "is somehow going to increase the value."
On the same panel, Brian L. Roberts, the president of Comcast who is set to become chief executive of the combined AT&T-Comcast cable company, said the drop in stock prices in the cable business was much less serious than the trouble afflicting the telephone industry.
"If you're in a business where you have one revenue source, and that revenue source is going backwards, and you have no new products on the drawing board that you can sort of feel and touch, and think `it's just around the corner,' then that makes you walk around glum," Mr. Roberts said, referring to the telecommunication's industry's reliance on standard voice telephone service.
Mr. Parsons said AOL Time Warner would probably not mount a significant effort to deliver telephone service over cable until late 2003.
Michael S. Willner, chief executive of Insight Communications, a smaller cable operator, said he expected to strike a deal within months to bundle the America Online service with Insight's cable modem service.
