Icahn Missing Major Ally


Corporate raider Carl Icahn has been lining up support in his months-long battle to oust Time Warner Inc. management and split up the company, but he may be short at least one influential holder of the media giant’s stock -- Los Angeles-based Capital Research & Management Co.

According to a report in The Times of London, published Monday, sources in the “Icahn camp” said Capital -- which holds about 5.3% of Time Warner stock -- is unhappy with Time Warner’s performance and was mulling siding with the controversial investor.

But according to an executive close to Capital, that is not the case.

The executive, who asked not to be named, said there was “zero truth” to the report that Capital was about to side with the Icahn camp.

Icahn is slated to unveil his plan for revitalizing Time Warner -- most likely splitting it up into four separate companies -- Tuesday afternoon at the St. Regis Hotel in Manhattan.

Capital, headed by influential investor Gordon Crawford, has been selling off parts of its stake in Time Warner for the past few years. According to filings with the Securities and Exchange Commission, Capital owned about 239 million shares of Time Warner stock as of Sept. 30, the latest figures available. That is down from the 346 million shares the fund owned in the previous year.

But that has mainly been in response to the drag on the media sector in general, rather than any displeasure with Time Warner management, the executive said.

Asked what he thought of Icahn’s chances of forcing big changes at Time Warner, the executive replied: “I don’t think he has a prayer.”

Icahn has about 3% of Time Warner stock, and there were reports last week that a new investment company backed by the government of Dubai would vote with him. The investment fund, Istithmar Media Investments, said in an SEC filing Monday that it has retained Icahn Institutional Services as an advisor regarding its exposure to Time Warner shares.

Istithmar said it has about $2 billion under management, but it did not reveal how much, if any, Time Warner stock it owned. Even if it were to invest the entire $2 billion in Time Warner shares, that would only boost the Icahn group’s stake to 6% -- still short of its stated intent to garner support from 50% of Time Warner shareholders.

Icahn began his battle with Time Warner in August, calling for a spinoff of its cable-systems operations (Time Warner Cable) and its America Online Inc. Internet unit. Icahn has also criticized Time Warner chairman and CEO Richard Parsons, calling for his ouster, along with most of the company’s management.

On Jan. 30, Icahn revealed in a SEC filing that he had hired former media executive Frank Biondi to head up Time Warner should his efforts be successful.