Biz Briefs: Icahn Readies TW Board Nominees

Sep 19, 2005  •  Post A Comment

An investment group led by financier Carl Icahn said last Monday it will nominate one or more people to serve on the board at Time Warner. It was the latest move in Mr. Icahn’s attempt to trigger a strategy change at the media giant. Citing what he called “a difference of opinion” between certain investors and Time Warner’s management over the company’s direction and its weak stock price, Mr. Icahn said that “having shareholder-nominated directors on boards of directors is a major positive in general.” The nominations would be made at Time Warner’s next annual meeting.

The announcement of the board nominations is the latest in a series of moves made by Mr. Icahn to effect change at the media giant. Arguing that shareholders are not getting their money’s worth, Mr. Icahn has teamed with a few other investors and begun buying shares in the media giant to force management to follow through with a series of moves Mr. Icahn believes will boost shareholder value. Among the things he wants Time Warner to do is spin off 100 percent of Time Warner Cable to the public (the company previously announced it plans to spin off 15 percent of the cable operation) and repurchase up to $20 billion worth of stock (the company’s current buyback plan tops out at $5 billion).

N.Y. Times Co. Plans to Buy KAUT

The New York Times Co. said Wednesday that it has agreed to acquire KAUT-TV in Oklahoma City from the Viacom Television Stations Group. Terms of the sale were not disclosed. In purchasing KAUT, a UPN affiliate, New York Times Co. is able to create a duopoly in the Oklahoma City market, where the company already owns NBC affiliate KFOR-TV. If approved, the purchase will bring to nine the number of network-affiliated television stations New York Times Co. owns.

Disney Warns of Big Q4 Loss

The Walt Disney Co. warned investors last week that in the fiscal fourth quarter ending Sept. 30 its film division could post a loss of $250 million to $300 million due to a string of box-office failures. The weak box-office performance comes as Disney looks to clear out a slate of Miramax-produced movies and to part ways with Miramax founders Bob and Harvey Weinstein. However, the company said it is still on track to post double-digit earnings growth for the period on the strength of its broadcast and cable assets and theme parks.

EchoStar, DirecTV Downgraded

Bernstein Research said last Thursday it is downgrading the two U.S. satellite operators due to concern that their increased spending on subscriber acquisition and retention marketing will eat into the companies’ operating cash flow. Bernstein downgraded EchoStar Communications to “market perform” from “outperform” amid weakening confidence the company will be able to continue improving cash-flow generation. Meanwhile, DirecTV was downgraded to “underperform” from “market perform” as the company faces stiff competition from cable operators rolling out telephony services, which has helped the cable sector retain customers.