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) - Get Report

have moved to divest themselves of some noncore assets, and

Viacom

(VIAB) - Get Report

has rolled out a plan to split in two.

Icahn's comments come after a speculation erupted last week that he was ready to

take aim at the company over the poor performance of its stock in recent years. Icahn has shown an activist bent regarding a number of big companies in recent months.

Icahn says he contacted Time Warner CEO Dick Parsons, and "they agreed to meet this week to discuss the investors' views for actions to enhance TWX shareholder value." Sources close to Time Warner say, however, that it was Parsons who contacted Icahn last Friday to set up a meeting this week.

The central issue for Icahn appears to be that the company, while having managed the businesses well in recent history, has not moved ahead quickly enough to get the stock moving. Indeed, Icahn said in Monday's statement, "while TWX management has done a commendable job managing each of their various businesses and, although the company recently has announced that it is undertaking certain measures to enhance shareholder value, it has not moved quickly enough and it has not proposed measures which would enhance values to the degree necessary to realize the inherent value of TWX's well-positioned and unique assets."

To that end, Parsons has slashed debt in half and made plans to spin off 16% of the cable business once the Adelphia deal is closed in early 2006. Time Warner and

Comcast

(CMCSA) - Get Report

agreed this spring to acquire the bankrupt cable operator in a deal that will divide the assets between the two.

"Our board and our management are committed to creating long-term value for all shareholders, and we have been on a course that demonstrates that commitment," said Time Warner spokeswoman Mia Carbonell in a statement. "We have a process in place in which we carefully review the range of options available to realize that value. We would of course speak with any interested shareholders who have relevant thoughts or perspectives, and in that context, we have informed Mr. Icahn that we'd be happy to meet with him."

Larry Haverty, associate portfolio manager of Time Warner shareholder

Gabelli Global Multimedia

(GGT) - Get Report

, shrugged off the Icahn move. Haverty says he thinks that the company could please investors by completing its planned $5 billion buyback within six months or so. He called Time Warner well managed in terms of tax efficiency, adding that any big transaction now could "impact tax loss carry forwards."

Haverty said this month's class action settlement has emboldened certain people who previously were worried about the legal risk at AOL. Haverty also cautions that leverage -- such as Time Warner might have to take on to do a huge share buyback and part ways with its cash cow cable business -- is a great thing when interest rates are going down. But now they're going up, and that calls for a more conservative debt to cash flow ratio, he said.