CEO PARSONS: 'NO ONE CAN RUN THESE BUSINESSES BETTER'

Positive Results Boosts Time Warner’s Position Against Corporate Raider

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NEW YORK (AdAge.com) -– With the release of its year-end results, Time Warner tried to armor itself against corporate raider Carl Icahn, who is attacking management decisions with increasing regularity as a May showdown at the annual meeting draws nearer.
Richard D. Parsons
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In Time Warner’s favor, the stock price rose on the news of its 2005 earnings. Richard D. Parsons, chairman-CEO, even went so far as to indirectly challenge Mr. Ichan, who plans to detail how he would structure Time Warner if he gains control in a presentation scheduled for Feb. 7.

“Our board of directors and management are confident that we are on the right course,” Mr. Parsons said during a conference call. “If I can be allowed one moment of immodestly, no one can run these businesses better than the current management is running them.” Referring to Mr. Icahn’s frequent charge that the company is not maximizing shareholder value, he said management won’t act “simply because we are impatient with the market’s pacing.”

Intense confrontation
The confrontation between management and Mr. Icahn’s dissident group is growing in intensity, not just in the release of yesterday’s results. Mr. Icahn this week lined up Frank Biondi, former CEO of Universal Studios and Viacom, to lead the slate of candidates to win seats on Time Warner’s board. Both have taken to complaining about overhead spending at the company, particularly attacking its decision to build an enormous and lavish new headquarters complex at Columbus Circle in New York.

Analysts said they were satisfied with the results and continued to express skepticism about the Icahn plan. A Bear Stearns research note from Raymond Lee Katz and William Lo included a section entitled “breaking up is hard to do.” The pair estimated Time Warner’s value in the event of a breakup at $29 per share, but flagged the estimate with a warning.

“This is more theoretical than real," they wrote, "with some divisions not easily sold and tax ramifications unclear and potentially punishing.”

Cable boosts revenue
Time Warner reported fourth-quarter earnings of 25 cents per share, excluding special items, surpassing the consensus forecast of 22 cents compiled by Thomson First Call. Revenue rose 7% to $11.89 billion from $11.11 billion during the same quarter a year earlier, largely due to the performance of its cable networks, cable operations and movie and TV studios. The company also took a page from Mr. Icahn’s plan and sped up its share repurchase program.

Time Warner shares rose 4%, or 69 cents, to close at $18.22 on Feb. 1.

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