Icahn Asks Time Warner to Split Off Cable Unit

Aug 15, 2005  •  Post A Comment

Investor Carl Icahn has outlined what he and a group of investors want Time Warner to do to boost shareholder value. Mr. Icahn also he said he and Time Warner Chairman and CEO Richard Parsons will meet this week to discuss the investors’ recent purchase of shares in the media giant.

In a statement released Monday, Mr. Icahn said he and his team have asked that Time Warner completely split off its cable unit and that it initiate a share repurchase program of at least $20 billion.

Time Warner plans to share just 15 percent of its cable unit with the public and has in place a stock buyback program worth $5 billion.

The Icahn statement also said his investor group has informed Time Warner that it plans to buy more than $500 million in Time Warner shares and that the Icahn team has agreed not to sell any shares until either February 2007 or the company’s next annual meeting, whichever comes first.

In addition to Mr. Icahn’s Icahn Partners and Icahn Partners Master Fund, the investor group includes Franklin Mutual Advisors, Jana Partners and SAC Capital Advisors. Collectively, they own shares worth more than $2.2 billion.

The statement confirms rumors that have buzzed throughout investor circles for the past week that Mr. Icahn, who has a reputation as an activist investor, has turned his sights on Time Warner, which despite having paid down a substantial amount of debt, continues to see its stock price languish in the mid-teens.

According to Mr. Icahn’s statement, although Time Warner’s management “has done a commendable job managing each of their various businesses and, although the company recently has announced that it is undertaking certain measures to enhance shareholder value, it has not moved quickly enough and it has not proposed measures which would enhance values to the degree necessary to realize the inherent value [of the company’s] well-positioned assets.”