Case Joins Icahn in Cry for Time Warner Split


Last week wasn’t a good one to be Dick Parsons. The Time Warner Inc. chairman and CEO fielded shots from both sides last week as former Time Warner board member Steve Case published an essay in The Washington Post on Dec. 11 criticizing company management and calling for the media giant to be split into four separate companies, a proposal he said he put before the board in July that was summarily rejected.

Two days later, corporate raider and perennial thorn in Parson’s side Carl Icahn demanded that Time Warner release the minutes from every board meeting where a separation of assets was discussed.

Case, who orchestrated the $112 billion merger of his America Online Inc. with Time Warner Inc. in 2001 — now considered to be one of the worst corporate marriages in history — said that Time Warner should be split into Time Inc. (its magazine division), Time Warner Entertainment (movie studios and Home Box Office Inc.), Time Warner Cable and AOL.

Case, who resigned as chairman of AOL Time Warner in 2003 under harsh criticism, left the board of the renamed Time Warner Inc. in October.

“Although I played a key role in bringing AOL and Time Warner together six years ago, it’s now my view that it would be best to 'undo’ the merger by splitting Time Warner into several independent companies and allowing AOL to set off on its own path,” Case wrote in the essay.

Case lamented the failure of Time Warner Cable to integrate its Road Runner high-speed Internet service with AOL — he said he had proposed doing away with the Road Runner name altogether in favor of the better-known brand. He also criticized the company from transforming AOL, which was once the country’s leading Internet company, to its present state.

“Instead of propelling AOL to new heights, the association with Time Warner has weighed AOL down, while its competitors, such as Google [Inc.] and Yahoo [Inc.], have made important strides forward,” Case wrote.

But Case glossed over criticisms of his tenure at the helm of the media giant. “I have my own views, but now is not the time for that debate,” Case wrote.

Icahn, who launched his war with Time Warner management in August and with three partners owns about 3% of Time Warner’s shares, quickly fired off his own press release Dec. 13, supporting Case’s views.

“We are shocked that Time Warner’s shareholders have had to rely on The Washington Post, well after the fact, to learn that a member of the Time Warner board proposed to the board that value would be enhanced by splitting the company into four separate entities,” Icahn said in the statement. “Investors need to understand what level of debate actually occurred at the board, what type of analysis was conducted and who was responsible for this analysis, all of which go to the heart of shareholder accountability.”

Icahn is demanding the minutes from every board meeting and board presentation that discussed a split of assets and the names of advisers and consultants and the work they did on the issue.

Earlier this month, Icahn said he has hired Lazard Ltd. as an adviser to look into possible scenarios for Time Warner, as well as a new slate of directors. Icahn has said he intends to propose replacements for a majority of Time Warner’s board at its next annual shareholders’ meeting in the spring.