Investor Carl Icahn, pushing for a breakup of Time Warner, will propose merging Time Warner’s America Online and entertainment businesses with a smaller Internet portal, a person familiar with the matter said.

Mr. Icahn, who leads an investor group which is planning a proxy contest to take control of Time Warner’s board, will propose Time Warner spin off its publishing and cable-system units. The businesses remaining would be AOL, Warner Bros. Entertainment, New Line Cinema, Home Box Office, and the Turner cable networks such as CNN and TNT. It is these operations that Mr. Icahn wants to merge with a portal, this person said.

Mr. Icahn’s group has held preliminary talks with what one person said were small Web portals. The identity of the Web concerns isn’t known but Mr. Icahn isn’t believed to be thinking of a merger with a major portal such as Yahoo. It is possible he is considering a deal with a destination Web site.

The Icahn-led group owns about 3% of Time Warner’s stock. Mr. Icahn has hired investment bankers Lazard as an advisor on the proxy fight which is gathering steam ahead of the May scheduled date for Time Warner’s annual meeting.

A Time Warner spokesman said “we will, of course, study any real Icahn/Lazard proposal thoroughly and carefully. At first glance, this trial balloon or rumor seems to lack the specificity for a thorough response.”