The fog surrounding Time Warner ( TWX) continues to thicken. Just as the media giant and its peers were uniting Tuesday against the threat of regulatory action, activist shareholder Carl Icahn dropped his own bombshell, naming as his new brother-in-arms the hard-hitting Lazard banker Bruce Wasserstein. Icahn's group, which controls 2.5% of Time Warner shares, hired Wasserstein to rummage through the trash bins outside 1 Columbus Circle and to choose a fantasy-league board slate. Icahn's displeasure with Time Warner stems from the company's stock, which has been frozen in the teens for more than three years since its well-chronicled plunge after the big AOL-Time Warner merger of 2001. Icahn has demanded a full cable spinoff and a $20 billion stock buyback. Time Warner earlier this month agreed to meet him halfway on the buyback, raising its repurchase target to $12.5 billion from $5 billion, though the company hasn't changed its limited spinoff plans. But some media investors doubt even a change atop Time Warner -- something that seems to be in no danger of taking place, given repeated promises to stay the course CEO Dick Parsons has charted -- would get the stock moving Icahn's way. "The price of Time Warner is not being affected by management," says Larry Haverty of big shareholder Gabelli & Co. "It's really about external realities." Haverty says those realities include low cable valuations and concerns about capital spending and free cash flow. The FCC's move Wednesday, which raises the prospect of an extended debate over the industry's pricing model, only adds to the morass. One analyst strongly agrees. "Media and entertainment valuations are in the toilet," says the analyst, "What Icahn does or proposes isn't going to change anything. It hasn't worked for Viacom ( VIA) or for Liberty ( L). Investors are not unhappy with Time Warner management." What Wall Street is unhappy with is that television advertising is declining in popularity, as a welter of cable channels and the four big broadcast networks fight off digitally equipped viewers looking to tune out ads altogether, and as the Internet becomes a more viable ad vehicle. Meanwhile subscriber growth has slowed for the big cable operators, and the prospect of trimming the average consumer's cable tab -- however remote -- is most distasteful to investors who have footed the bill for years of hefty capital spending at the likes of Comcast ( CMCSA) and Cablevision ( CVC).