After Icahn Meeting, Parsons To Move As ‘Aggressively as Appropriate’

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

Time Warner said chief executive Richard Parsons met yesterday with dissident shareholder Carl Icahn and pledged to move “as aggressively as appropriate” to bolster the company’s stock price.


At a 50-minute face-to-face meeting yesterday, Mr. Icahn and Mr. Parsons had a “frank and open exchange of views,” a spokesman for Time Warner, Ed Adler,said. He declined to elaborate.


Mr. Parsons agreed to talk with Mr. Icahn after the financier disclosed this week that he is leading a group that amassed a $2.2 billion stake in the company. The group is demanding a $20 billion share buyback and spinoff of the cable-TV business. Mr. Icahn’s lobbying has split investors frustrated by a 5.9% drop in the company’s stock this year and those willing to give Mr. Parsons time.


“I trust the company will take into account” what Mr. Icahn told them during the meeting, the head of Glass, Lewis and Company, a San Francisco based proxy advisory service, Greg Taxin, said. “Mr. Icahn has been extraordinarily effective with the targets of his prior actions.”


Mr. Icahn, 69, didn’t immediately return a call seeking comment. He and three partners, Franklin Mutual Advisers, Jana Partners LP, and SAC Capital Advisors LLC, have stock and options that would give them a 2.6% stake in the company.


Shares of Time Warner lagged behind the Standard & Poor’s 500 index, which gained 0.7% this year. The stock fell 10 cents to $18.30 in New York Stock Exchange composite trading yesterday.


Because Mr. Icahn owns options in Time Warner, which have a finite life, he may have shorter-term goals for the company than other investors, the director of research at Lisle, Ill.-based Oakbrook Investments LLC, Peter Jankovskis, said. Time Warner should stagger stock buybacks over time so it pays less, he said.


Mr. Icahn has amassed more than $7 billion over 40 years by targeting companies including Nabisco Group Holdings, Texaco, and World Airlines, and demanding changes. In May, he won a seat on Blockbuster’s board after a proxy battle.


Mr. Icahn so far has taken an uncharacteristically nonconfrontational approach with Mr. Parsons, an executive vice president at Rockville, Md.-based Institutional Shareholder Services, Patrick McGurn, said on August 15.


“They’re not blaming Dick Parsons for anything other than a lack of big ideas how to get the value of the company up,” Mr. McGurn said.


Without the support of the company’s largest shareholders, Mr. Icahn may find it difficult to pressure Mr. Parsons, a capital markets strategist in Boston at RiverSource Investments, David Joy, said.


Los Angeles-based Capital Research was the biggest Time Warner investor with 242.7 million shares, or 5.2% of the company, as of June, according to data compiled by Bloomberg. Axa, based in Paris, is the second-biggest investor with 188.7 million shares.


Both companies declined to comment on Mr. Icahn’s campaign.


Mr. Icahn’s suggestion to spin off the cable-systems division, the second largest American cable operator after Comcast, is an option Mr. Parsons may consider, said investors including Mr. Steinberg and Scott Benesch of U.S. Trust Company, which held 5.9 million Time Warner shares as of June.


“The cable business possibly should be spun out as long as it doesn’t interfere with the longer-term synergies of their business,” Mr. Steinberg said.


Mr. Parsons, 57, has over the past six months repeated during analyst calls and press conferences that he and the other top executives at Time Warner “like the cable business.”


In a July interview with Bloomberg News, Mr. Parsons said Time Warner wanted to “continue to be consolidators” in the industry.


The unit may be worth $40 billion, or 11 times its estimated 2005 earnings before interest, taxes, depreciation, and amortization, an analyst at Merrill Lynch & Company, Jessica Reif Cohen, said in an August 10 note. Ms. Reif Cohen is based in New York and rates the shares “neutral.”


Some investors also say Mr. Icahn’s buyback plan is too ambitious.


“A $20 billion buyback would hamper the company’s flexibility,” the president of Boca Raton, Fla.-based Steinberg Global Asset Management, Richard Steinberg, said. “There needs to be some level headedness so that Parsons can continue to manage the business for the future.”


The New York Sun

© 2025 The New York Sun Company, LLC. All rights reserved.

Use of this site constitutes acceptance of our Terms of Use and Privacy Policy. The material on this site is protected by copyright law and may not be reproduced, distributed, transmitted, cached or otherwise used.

The New York Sun

Sign in or  Create a free account

or
By continuing you agree to our Privacy Policy and Terms of Use