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Parsons Talks Up AOL

It's huge, he tells investors, as Time Warner struggles to figure out what to do with it.
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Time Warner


may be shopping its struggling AOL unit, but you'd never know it to hear Dick Parsons talk.

The New York media giant's chief said Wednesday that AOL would be a key driver of growth and increased valuation at Time Warner. Parsons also told a Goldman Sachs conference that the company is focusing on accelerating AOL's transition plans.

Parsons said he is committed to AOL and that the timing wouldn't be right to drop the online unit, even as it continues to lose subscribers at an alarming pace. Parsons also shrugged off suggestions that Time Warner spin off more than the 16% chunk of Time Warner Cable it is already committed to divesting.

The remarks come as critics led by 2.5% stakeholder Carl Icahn have tried to light a fire under Time Warner's flagging stock by calling for a big stock buyback and various asset sales.

Parsons said AOL is in the process of transforming a subscriber-based business into one that seeks to build audience and ad revenue. He did acknowledge, without commenting on possible discussions with



MSN, that the company is missing search capacity. He added, "We need to put ourselves in a position where we can build further reach outside the U.S."

"We're a key player on the game board," added Parsons, who called AOL the company's most undervalued asset. While "open to the argument of AOL having its own currency," Parsons said that he is somewhat weary of the current media deconsolidation theory that if you "cut and apple in half you will have three pieces of the apple."

Parsons said he still likes the cable business and said he wants the flexibility to "dial

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his commitment to it up or down based on our view of cable prospects."

With some understandable hesitation, Parsons also quoted former Time Warner CEO Gerald Levin, one of the two key architects of the AOL Time Warner merger, saying, "Content may be king, but distribution is the power behind the throne."

Parsons likened distribution to having a big brother in the schoolyard. "Imagine a world where Rupert captured all the satellite market and Brian captured all the cable market," Parsons said, referring to

News Corp.


chief Rupert Murdoch and



head Brian Roberts. "I would not be a happy guy."

In other words, he wouldn't want his huge content consigned to channel 950 on the digital dial.

Otherwise, Parsons was sanguine, noting picturesquely that Time Warner has sailed cautiously through a thick fog and past of a mountain of debt, giving it a lot of flexibility.

Time Warner was trading down 18 cents to $18.19