Analysts: New leadership unlikely to rock AOLTW's boat

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When Richard Parsons officially takes over the reins of AOL Time Warner Inc. (AOLTW) at the company's annual shareholder meeting in New York Thursday, all eyes will be on the new leader, in an effort to discern if the media mammoth has finally stumbled onto solid ground. Parsons, who up until now has held the position of co-chief operating officer, alongside Bob Pittman, is taking over for retiring Chief Executive Officer (CEO) Gerald Levin.

It's been a rough-and-tumble start for AOLTW. In 2001, the company's first year as the biggest media conglomerate in the world, the lumbering Cyclops had to face down one of the most monstrous advertising markets in recent history, sparked by an acute economic downturn.

Meanwhile, it's struggled to strike a balance with its numerous media properties, while somehow trying to fit them all on one neat and tidy balance sheet that investors and analysts will approve of. It hasn't been easy. The company's stock price has dropped nearly 66 percent since Time Warner Inc. and America Online Inc. (AOL) officially merged in January 2001. What's more, the company has undertaken a game of executive musical chairs, as it shifts around its personnel in an effort to find the right people for the right posts.

Parsons is a veteran of Time Warner, and some analysts have taken his ascendence to mean that the old media side of AOLTW is winning out over the new media forces. While AOLTW's strategy from the start has been to leverage its various TV, film, radio, magazine, cable and Internet assets against one another, industry pundits have also predicted that one side of the business would dictate the company's management style. With financial prudence high in the company's priorities, it looks as though the old media mindset, spearheaded by Parsons, may take the lead.

"I think what more people are realizing is that Its just another portfolio company with media assets, and they can't expect synergies," said Paul Kim, an analyst with Kaufman Bros. LP in New York.

Since the merger, AOLTW execs have been promising a lot of cross-pollination between of the company's disparate business ventures, boasting, for example, that a Warner Brothers Inc. (WB) film could be advertised across the company's magazine properties, encouraging readers to go online and buy advance tickets on AOL where they could then enter contests related to the film.

But according to Kim, this kind of asset leveraging in media doesn't make all that much of a difference.

"Seeing a WB film advertised on AOL doesn't blow my mind," said Kim.

Other analysts believe that there is potential for the company to create synergies among its diverse holdings, however.

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