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Icahn Presses Time Warner for Changes

October 12, 2005|From Associated Press

NEW YORK — Billionaire investor Carl Icahn stepped up his campaign for changes at Time Warner Inc. on Tuesday, issuing a letter to shareholders accusing the company's executives of mismanagement and demanding new shareholder representation on the board.

Icahn has already urged the company to step up its share buyback program to $20 billion from $5 billion as a way to lift the company's sluggish stock price. He also wants the company to completely spin off its cable TV division, instead of only the 16% stake that Time Warner plans to spin off.

In his letter to shareholders, Icahn also accused the company of getting poor prices on two previous deals: the sale of Warner Music Group last year and the sale of its 50% stake in Comedy Central to Viacom Inc.

He also criticized Time Warner's expenditures on its new headquarters building in Manhattan, including what he called "lavish features such as a grand employee cafeteria with two-story windows overlooking Central Park."

In response, Time Warner issued a statement saying it was committed to creating value for its shareholders and was considering other ways to return capital to shareholders such as increasing its share buyback program, dividend or both.

Icahn's appeals have not struck a deep chord with investors. Harold Vogel, a longtime media investor and head of investment firm Vogel Capital Management, called Icahn's proposals for change at Time Warner "very weak."

"Basically, he's looking backwards," Vogel said.

In his letter to shareholders, which was filed with the Securities and Exchange Commission, Icahn also disclosed that the collective stake in Time Warner held by his firm, Icahn Partners, and a group of affiliated investors had increased to 2.8% from the previously disclosed level of 2.6%.

Icahn's latest salvo at Time Warner did little to boost the company's stock. Its Time Warner shares slipped 21 cents to $17.80.

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