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AOL Time Warner Standing by Books

Aired July 18, 2002 - 14:23   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: The world's largest media company, and the parent company of this network, is standing by its financial statements from the years 2000 and 2001. AOL Time Warner's board of directors is meeting today outside Washington as the "Washington Post" reports a fraction of the company's past reported profits came from creative accounting. A company spokesman insists the transactions in question were appropriate and accurate.

And CNN's Greg Clarkin is live from Dulles, Virginia, with more on this. It gets us all a little nervous, Greg.

GREG CLARKIN, CNN FINANCIAL NEWS: Definitely, Kyra. This is just one of the issues that company executives are grappling with at a board meeting that's been going on for about two hours. It is expected to last maybe another two hours, and it's expected to result in the departure of Robert Pittman from AOL Time Warner. He is the chief operating officer of the company, as well as the gentleman overseeing the American Online Internet unit specifically.

So again, he is expected to be leaving the company today. He has become something of a focal point for investor displeasure with this merger over the last few months.

Now this morning, CEO Richard Parsons arriving here in Dulles, Virginia, at AOL's headquarters. He'll be leading this board meeting, and he was also joined by Ted Turner, another member of the board. Turner given a greater role under Parsons than he was under Parsons' predecessor, Gerald Levin.

Now, among the issues Richard Parsons has to tackle, they are -- a number of the issues that he has to tackle are explaining those ad revenues that are mentioned in the "Washington Post" this morning. Now, the "Post" calls into question how America Online specifically booked advertising revenue from some failing dot-coms. America Online standing by those statements, but still, he is expected, Parsons this is, to give more clarity into that matter if not today, then next week when the company announces earnings.

Also, Parsons has to restore investor confidence in the company. It's a stock that is down more than 60 percent year-to-date. He also needs to put an end to some of the corporate infighting. A lot of analysts say these units now among this gigantic media company are at each other's throats, and that needs to be taken care of. And then some analysts saying, you know, the point needs to be driven home that AOL is just another unit of Time Warner, and some folks speculating that maybe a name change might be in store, maybe dropping AOL from the AOL Time Warner name.

So again, it is expected that Robert Pittman will be departing the company, and if you are keeping score, that is roughly, or exactly rather, 50 percent of the executives that were responsible for this deal now gone.

We saw Gerald Levin leave a couple of months ago. He was the CEO of Time Warner, and that leaves Richard Parsons as the CEO, and Steve Case still intact as chairman, and those two executives still the remaining two of the four that really put this deal together.

So again, it looks like another management shakeup on tap for the company -- Kyra, back to you.

PHILLIPS: Greg, I've got to ask you this. As employees, what does this mean for you, for me, 401(k)s, owning stock?

CLARKIN: It has a lot of impact here. The stock right now obviously under a tremendous amount of pressure. This "Washington Post" article today pressuring it again. It is down in Wall Street trading.

So the feeling is that Dick Parsons needs to step forward, kind of firmly take control of the company, outline his strategy, his vision for the company. That might restore some investor confidence, and then hopefully, a lot of folks believe that the company may see a rebound in their stock price. But still, there is a long way to go. A lot of analysts saying this is going to be a very, very slow process to have this stock to rebound.

PHILLIPS: Greg Clarkin, thank you.

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