Dick Parsons will depart as CEO of Time Warner Inc. at the end of the year, five years after taking the helm of the world’s largest media conglomerate and rebuilding its stature following a disastrous merger with AOL.

Mr. Parsons, who is 59, will be replaced on January 1 by the 55-year-old Jeff Bewkes, a former head of HBO who is currently the company’s chief operating officer, Time Warner said today. Mr. Parsons will stay on as chairman.

The CEO changeover had been widely expected. Mr. Parsons’ contract runs through next May, but Mr. Bewkes has been groomed as Mr. Parsons’ successor for the past several years.

Investors will be looking to the company’s third-quarter earnings announcement and conference call on Wednesday for clues about Mr. Bewkes’ plans for leading the company.

Mr. Parsons, one of the most prominent black executives in corporate America, has spent much of his tenure repairing the damage from Time Warner’s agreement in 2000 to be acquired by the pioneering Internet company AOL.

The grand synergies promised by the deal never materialized, and the company later faced, and settled, shareholder lawsuits and federal investigations stemming from shady accounting practices at AOL.

Mr. Parsons did much to regain the faith of Wall Street, and successfully fended off a challenge from an activist investor, Carl Icahn, in 2006 to break up the company.

He pared the company’s debt and sold off several businesses, including Warner Music Group and a book publishing business, to clarify and streamline the company’s structure, which had been criticized as unwieldy.

However investors remain frustrated that the company’s stock is still stuck at around the same level as it was five years ago, when Mr. Parsons took the helm.

Expectations will now focus on Mr. Bewkes, a highly-regarded and energetic executive who helped build HBO into a premier media brand, to take action to reinvigorate the stock.

Shortly after the official announcement of Mr. Bewkes’ appointment, the company’s shares were up 21 cents at $18.09.