• by Wayne Friedman , September 13, 2005

Financier Carl Icahn may not be getting any closer to acquiring more shares of Time Warner. But that doesn't mean all avenues are closed. Icahn, a billionaire investor known for agitating companies to improve shareholder value, will try his luck in electing one or more nominees to the Time Warner board at the company's next annual shareholders' meeting.

Icahn said in a press release that this is "particularly important at Time Warner because of the difference of opinion between many large shareholders and management concerning the direction of the company and the lack of share price performance under current management."

"Icahn did the same thing with Blockbuster Video," said Dennis McAlpine, managing director of McAlpine Associates. "It worked. He got his guys on the board. But I don't think it's going to do him any good. There isn't as much disgruntlement as there was with Blockbuster." Two of Icahn's main objectives are for Time Warner to buy back some $20 billion in stock, and to entice the company to spin off--as a public company--all its cable operations assets. Time Warner has proposed buying back $6 billion shares and spinning off about 15 percent of the cable assets, following a three-way deal with Comcast Corp. to acquire the cable subscribers of Adelphia Communications Corp.

McAlpine said there are also major tax consequences for spinning off all of Time Warner's cable operations assets, which would prevent the company from making such a move.

In a statement, Time Warner said it was reviewing several options for increasing shareholder value.

Icahn notes that since Richard Parsons became CEO of Time Warner back in May of 2002, Time Warner's stock has dropped about 4 percent. Icahn says since the deal with AOL back in 2000, there have been no shareholder-nominated directors on the board--something he believes could have prevented such a deal.

It is widely believed that the deal in which Time Warner was sold to AOL dealt a crushing blow to the company, in which its stock fell steeply from the $90-a-share range.

Today, Time Warner's stock closed at 18.21 on the New York Stock Exchange.