Discussion With CEO of Time Warner; An Interview With Muhammad Yunus, Founder of Grameen Bank and Man Behind Idea of Micro Credit.

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Original Source: THE CHARLIE ROSE SHOW

CHARLIE ROSE, HOST: Welcome to the broadcast. Tonight, Richard Parsons. He is the CEO of Time Warner.

(BEGIN VIDEO CLIP)

RICHARD PARSONS, CEO, TIME WARNER: So we had to completely go back and rearchitect the language of AOL so that the things that were inside the walled garden could now be published to the Web. We`ve done that. We`ve just launched this summer, relaunched our aol.com site, which is now, I think, the equal of any portal out there. And now the job is to sort of begin to build the traffic, begin to build the unique use, begin to build the page views, and begin to really get our advertising business, which is the business that`s fueling the Google`s growth, and fueling Yahoo`s growth, get that business really rolling.

(END VIDEO CLIP)

CHARLIE ROSE: And a follow-up interview with Muhammad Yunus, the founder of Grameen Bank, and the man behind the idea of micro credit.

(BEGIN VIDEO CLIP)

MUHAMMAD YUNUS, FOUNDER, GRAMEEN BANK: We want to see more and more families go out of poverty, and we monitor them, how close they are to crossing the poverty. And then not only cross the poverty, also make sure they don`t slip back into poverty again. So that`s where we concentrate on the second generation, sort of they move the family way beyond the poverty line in a more respectable distance from the poverty line. So that even a disaster like a flood or a cyclone in a country don`t push them back into poverty again.

So this is our objectives, our goal, that we want to see that all the 100 percent of the Grameen borrowers are getting out of poverty.

(END VIDEO CLIP)

CHARLIE ROSE: Parsons and Yunus, next.

(COMMERCIAL BREAK)

CHARLIE ROSE: Richard Parsons is here, at long last. He is the chairman and CEO of Time Warner. It is the world`s largest media company. Among its holdings are Warner Brothers, America Online, Time Inc., HBO and CNN. I am pleased to have him here for the first time to have a conversation about the world that he lives in, and the challenges that he sees, and also the demands on a CEO in this 21st century.

Welcome. Great to have you here, sir.

RICHARD PARSONS: Nice to be here.

CHARLIE ROSE: Since you took over as CEO of this great company, you`ve reduced debt, you`ve settled some challenges to it from all kinds of things. You have addressed AOL, you know, issues and, what else? What is on your to-do list since you became CEO?

RICHARD PARSONS: I think it`s fair to say we`ve sort of settled the company down and removed some of the stones in the road that were impeding our progress. We`ve begun to address AOL. I don`t think we`ve fully addressed AOL, in the sense that my view that`s probably, the one piece of our portfolio that the market still undervalues. And what we need to do is we need to show the market today AOL can compete out in the world of the Internet with the Yahoos and the Googles as well as can continue to mine this narrow band business that it grew up on.

CHARLIE ROSE: Let`s stay right there.

RICHARD PARSONS: OK.

CHARLIE ROSE: And we`ll come to the other things. What do you want to do with it? And why has there not been an appreciation of its customer base and its name?

RICHARD PARSONS: Good question. I think the problem lies in the fact that AOL grew up, frankly, in a different era, even though these are, you know, in a 20-year span in Internet time you could have multiple eras. When AOL grew up, it grew up around a narrow band business, a dial-up business, people would get on their telephone and access the Internet that way. And the business model was basically a subscription business model. We charged a flat fee for access to the Internet, and then we fill that service full of good functionality and useful things.

Along comes broadband. Works better, runs faster, carries more information, can be media rich. And essentially allows a whole new set of carriers to deliver the Internet into people`s homes beside the phone company.

CHARLIE ROSE: Faster and better.

RICHARD PARSONS: Faster and better. So what people have seen -- and it is true -- is that the old narrow band base of AOL customers has begun to shrink. What the market pays for is growth, and here you had a business that was shrinking, at least in the size of its customer base, down from maybe a high of 28 million to 20 million customers now. And there will be more shrinkage of that part of the business going forward. I don`t think it ever goes away, just like you still have local roads going alongside the interstate. But it will be smaller next year than it is this year, and so on and so forth for a while.

So the market looks at that and says, well, AOL, your business model is not growing, it`s shrinking, and so your business is going to ultimately shrink.

What we`ve got to do and what we`re in the process of doing is saying, no, no, we still have 20 million customers here, we have probably the strongest brand name, even still, in the Internet. You look at almost anybody`s e-mail address, it`s charlierose@aol.com. Right? AOL, you look at keywords on NFL, on all these, AOL, very strong brand.

What we`ve got to do is we`ve got to move the business -- not give this up, because it`s a very profitable high margin business, but we`ve got to also move AOL onto the Web, onto the Internet, like Yahoo and Google and MSN, where you can access aol.com, free, if you have a broadband provider, and that there`s rich and deep media and functionality in our free Web site. And that`s what we`re doing. Because we`re going to have two business models going forward. We`ll have -- we`ll continue to mine the subscription business, even as it shrinks, still very profitable, and we`ll grow the advertising business. Because what the Web is becoming, is like television for the 21st century.

CHARLIE ROSE: Is it fair then, based on what you`ve already said, that because you were in the business when you came in, you had to pay attention to debt, you had to pay attention to some legal challenges, you had to pay attention to other things, and that you didn`t get to AOL, and you didn`t give AOL, because you were preoccupied with some of this other stuff, which had an emergency nature to it, the funds and the resources and the direction to do what it needed to do?

RICHARD PARSONS: I wouldn`t say that exactly. It is true that we had other challenges. But one of them, first of all, was sort of arresting the freefall of AOL, and just getting our arms around the business and salvaging a business that still generates north of 8 billion in revenues and close to 2 billion in operating earnings. So, it`s not a small business. And to keep it from falling off the table, and make that business run as well as possible.

And then secondly -- and this was the big challenge -- most people had forgotten this, but AOL actually predates the Internet as we know it. There was an Internet, but it was used for military purposes and all that sort of thing, and by professors. So AOL...

CHARLIE ROSE: What we`re talking about is 95 and Netscape.

RICHARD PARSONS: Right, exactly. AOL was around before then. And it was a proprietary service that had its own language, if you will. Not the language of the Internet, not HTML, something called Rainman. So the other thing we had to do -- and they had the walled garden. And while you could access AOL, it was delivered over the Internet, it was not compatible, if you will, with most of the other functions and services running on the Internet. So we had to completely go back and rearchitect the language of AOL, so that the things that were inside the walled garden could now be published to the Web.

We`ve done that. We just launched this summer our -- relaunched our aol.com site, which is now, I think, the equal of any portal out there. And now, the job is to sort of begin to build the traffic, begin to build the unique use, begin to build the page views, and begin to really get our advertising business, which is the business that`s fueling the Google`s growth, and fueling Yahoo`s growth, get that business really rolling.

CHARLIE ROSE: Speaking of that, I mean, I`ll come back to aol.com, but it is -- you would think that what has fueled Yahoo and fueled Google is the online advertising,...

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