Time Warner Suggests Reverse Stock Split

NEW YORK -- Time Warner (TWX Quote) is asking its shareholders to approve a reverse stock split that would reduce the number of outstanding shares and double or triple the share price, according to a securities filing Monday.

The owner of the CNN cable network and the Warner Bros. film studio said the split would give holders one share for every two, or one share for every three, a ratio to be determined by the board if shareholders approve, the filing said.

The company believes the reverse split will improve liquidity in the stock following the planned spinoff early next year of Time Warner Cable Inc., the nation's second-largest cable operator, which could cause Time Warner's shares to fall.

"The reverse stock split could increase the likelihood that the Time Warner common stock market price will stay at a level that would be viewed more favorably by potential investors," the company said in the filing.

A special shareholders meeting has been scheduled for Jan. 16 to vote on the proposal.

As of Nov. 20, there were 3.59 billion outstanding common shares in Time Warner.

The company's shares fell 38 cents, or 4.2%, to $8.67 Monday afternoon, as all major indices plunged amid confirmation the nation is in a recession and the economic data indicated more rough sailing lies ahead.