Icahn Wants to See Time Warner Split

Updated from 10:13 a.m.

Time Warner's (TWX) most vocal restive shareholder, Carl Icahn, demanded Monday that the company take action to boost its flagging stock.

Icahn said Time Warner should separate its cable systems from its content businesses and buy back much more stock. Chiding the big media company for not moving "quickly enough" to boost shareholder value, Icahn said he and his friends are on their way to owning $4 billion worth of the company's stock. That's notable, because at recent prices a stake of that size would give the group around 5% of the company, an important threshold for various legal and regulatory reasons.

Time Warner rose 20 cents early Monday to $18.44.

Icahn said his hedge fund and some allies -- Franklin Mutual Advisors, JANA Partners and SAC Capital -- together own $2.2 billion worth of Time Warner stock. He said the members of group each have signaled their intent to buy an added $500 million worth of stock and to hold the shares until the next shareholder meeting or until February 2007, at Icahn's discretion.

The "separation of the cable business from the content businesses combined with the immediate repurchase of at least $20 billion of common shares would eliminate the discount between TWX's share price and the inherent value of its unique assets," Icahn said. "The investors intend to discuss these views with other large holders of TWX common stock."

CEO Dick Parsons has won plaudits for steering the company through some competitive and regulatory minefields in recent years, but complaints about the company's stagnant stock price have grown louder in recent months. Time Warner set plans this month to buy back some $5 billion worth of stock, but some investors immediately responded that it wasn't enough.

Meanwhile, media rivals such as Disney (DIS) have moved to divest themselves of some noncore assets, and Viacom (VIAB) has rolled out a plan to split in two.