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Parsons Counters Icahn’s Attacks

Feb 1, 2006  •  Post A Comment

Time Warner Chairman Richard Parsons responded Wednesday to some of the criticism being lodged against him and the rest of the media giant’s management by financier Carl Icahn, arguing that “No one can run these businesses better than the current management.”

Mr. Parsons said Time Warner management will continue to consider looking at several strategic alternatives designed to unlock value and jump-start the company’s moribund stock price, but warned that “We cannot and will not experiment with the flavor of the day,” a reference to the trend of big media companies, such as Viacom, splitting themselves.

The comments, made during Time Warner’s fourth-quarter earnings conference call with analysts and investors, come as Mr. Icahn ratchets up the heat on Time Warner management, pushing for them to more aggressively buy back stock and spin off or sell several assets, including a complete spinoff of Time Warner Cable rather than the planned 16 percent spinoff currently in the works.

Earlier this week Mr. Icahn enlisted former Universal Studios Chairman Frank Biondi in his proxy fight against Time Warner management, saying Mr. Biondi would become Time Warner’s chairman should Mr. Icahn be successful in gaining seats on the Time Warner board.

Meanwhile, Time Warner reported Wednesday that its fourth-quarter profit surged 21 percent to $1.4 billion on the strength of the company’s television networks and cable operations. Revenue advanced 7 percent to $11.9 billion. For the year, the company’s profit fell 14 percent to $2.9 billion on a 4 percent increase in revenue to $43.7 billion.

Among the various divisions, Time Warner Cable reported a 13 percent increase in revenue to $2.5 billion for the quarter, while operating income rose 12 percent to $555 million. The company reported adding 34,000 basic cable subscribers, while digital cable subscriptions rose by 199,000. High-speed data customers increased by 265,000, and digital phone customers climbed by 246,000. For the year, Time Warner Cable reported a 12 percent increase in revenue to $9.5 billion, and operating income rose by 13 percent to $2 billion.

The company’s networks unit, which includes HBO, Turner Broadcasting and The WB, reported a 6 percent increase in revenue to $2.4 billion and a 23 percent rise in operating income, driven by continued ratings strength and advertising revenue. For the year, the unit reported a 6 percent revenue increase to $9.6 billion and an 11 percent rise in operating income to $2.7 billion.

America Online, meantime, continued to lose dial-up subscribers but appeared to be making inroads in the advertising area, which AOL officials are emphasizing more as a source of growth. For the quarter, revenue fell 8 percent to $2 billion, while operating income soared 45 percent to $174 million.

For the year, revenue fell 5 percent to $8.3 billion while operating income jumped 25 percent to $1.2 billion. The company said that while subscription revenue continued to decline, advertising revenue was growing by double digits.