Interventionist shareholder Carl Icahn has recruited an unlikely ally in his war of attrition to force global media giant Time Warner into drastic action over its sagging share values.
Steve Case, founder of America Online with which TW merged disastrously in 2000, believes the parent company should now be split up.
Writing in the Washington Post newspaper, Case says: "TW has proven too big, too complex, too conflicted and too slow-moving - in other words, too much like a classic conglomerate - to seize new opportunities."
Case resigned as a director of TW in October but still owns $250 million (€211m; £142m) of stock in the company. His proposal echoes that of Icahn, who says TW should be spilt into four distinct units: Time Warner Cable; the AOL internet business; the Time Inc publishing unit; and content activities comprising Warner Brothers studios and cable channels such as HBO and CNN [WAMN: 05-Dec-05].
Icahn, who with his hedge fund associates owns 3% of the company, has been piling on the pressure since the summer. Initially he demanded a £20 billion share buyback and a complete spin-off of the cable assets but in recent weeks has upped the ante in favour of a carve-up.
TW ceo Richard Parsons has listened to Icahn's ideas and the board has already put in place a $5bn buyback scheme over several years, subsequently raised to $12.5bn.
Despite the insistent voices, however, TW is unlikely to bow to Case's. Comments Edward Adler, evp for corporate communications: "We've concluded that there is no evidence that the steps he has proposed will improve shareholder value."
Data sourced from Wall Street Journal Online; additional content by WARC staff