TW Boss Rejects Icahn's Demerger Demand

17 October 2005

Time Warner chairman/ceo Richard Parsons last week refuted interventionist shareholder Carl Icahn's demands that TW demerge its cable business with a homespun analogy straight from the annals of Lake Wobegon.

Despite the absence of a fiddle, banjo and accordion backing group, Parsons countered in fine country style: "If you cut an apple in half, you get half an apple," he told the city slicker billionnaire.

Pausing momentarily to chaw on his quid, Parsons continued: "[If Icahn's demands were met] I would bet that in three or four years from now people would be struggling to get [the demerged units] back together."

Although aimed at Icahn, the remarks were addressed to a conference in Hong Kong, at which the TW boss agreed with the dissident shareholder that the group's share price was undervalued.

But, insisted Parsons, a total sell-off of the cable unit would not boost the group's share price, whereas TW's planned listing of a minority stake would likely do just that.

As to Icahn's other demand - that TW increase its promised $5 billion (€4.19bn; £2.86bn) share buyback from stockholders to $20 billion - Parsons hinted at a compromise while avoiding mention of a specific sum.

As to recent reports that Google and US cable group Comcast are mulling a joint bid for a stake in AOL [WAMN: 14-Oct-05] , Parsons dismissed such talk as mere market rumours. He did, however, reveal that TW is discussing with Microsoft "areas of mutual interest". The software giant is another likely contender for a slice of the AOL action.

As to TW's ambitions in the Far East, Parsons sees India as a more promising market for foreign media groups than China. He cited the former's more stable rule of law and lower levels of censorship as his reasons for this view.

In this he is at one with Rupert Murdoch, who recently declared his growing disenchantment with the People's Republic: "[China is] a very tough market for a media and entertainment company … because of some fundamental things, [like] rule of law. It's hard to make long-term investments, long-term deals if you don't exactly know what the playing field is going to look like."

Data sourced from Financial Times Online; additional content by WARC staff