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).