Icahn's plans for media giant

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While Mr. Logan was speaking with Advertising Age and turning his thoughts toward bass fishing, billionaire financier Carl Icahn was putting the final touches on his plan to sunder Time Warner.

During a presentation in New York last week, Mr. Icahn offered a very different assessment of the company than Mr. Logan did. He charged in particular that Time Warner operates without a long-term strategy, which results in underestimating its cash flow, underinvesting in its businesses, ineffectual deal-making and bloated overhead. His prescription? Separate the company into four publicly traded units: AOL, Time Inc., Time Warner Cable and its network and filmed entertainment operations. The argument is tha each could create its own long-term strategy, retain the size and scale to function effectively and appeal to a distinct set of investors.

The presentation began with a report from Lazard Freres & Co., the investment bank that Mr. Icahn hired last November to help lead a proxy fight to take over the board of directors. Lazard Chairman Bruce Wasserstein said, in an unusual public pitch, that short-term thinking among Time Warner leaders has cost shareholders "at least a staggering $40 billion."

Time Warner said it is on the right path. "We will study the Icahn/Lazard proposal carefully and thoroughly, as is consistent with our existing practice and with our fiduciary duties to shareholders." (See related story, P. 8 and online at AdAge.com QwikFIND aar39g).

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