Icahn Seen as Lowering His Sights

Carl Icahn’s months-long fight to gain control of Time Warner Inc. could end with a whimper instead of a bang.

Icahn, engaged in a proxy fight with Time Warner since August, could be close to a settlement with the media giant, The Wall Street Journal reported.

Icahn had said he would propose a new slate of directors to replace the existing 14, The Journal said, though Icahn now plans to put forth a slate of just five new board members, far short of the majority he would need to effect change at Time Warner.

The five include former Viacom Inc. CEO Frank Biondi, whom Icahn had proposed as Time Warner chairman. Others are former U.S. Trust chairman Alan Weber; VeriFone Holdings Inc. executive Doug Bergeron; TIAA-CREF executive Peter Clapman and former California Public Employees Retirement System (CalPERS) CEO Dale Hanson. Biondi was also to serve as Time Warner chairman should Icahn’s efforts be successful

Icahn had until Feb. 19 to present his slate in time for Time Warner’s annual shareholders meeting, scheduled for May.

The New York Times reported Icahn might settle for a stock buyback more substantial than the company’s currently $12.5 billion effort, and a greater commitment to cost cutting.

Time Warner declined to comment. Icahn’s spokeswoman Susan Gordon also declined comment.

Icahn indicated to The Journal he was having trouble finding backing from other shareholders. “Many shareholders want change on the board, but they feel a full slate would be disruptive,” he told The Journal. “I agree it’s disruptive, which is why we’re cutting down the slate. I think the addition of five well-respected guys to the board would be accepted.”

Merrill Lynch & Co. media analyst Jessica Reif Cohen said in a report: “The apparently rapid resolution demonstrates the depth of the disconnect between Mr. Icahn and other investors with regard to management performance and the potential for valuation upside in the event [Time Warner] were to be split apart, in our opinion.”

Time Warner stock closed unchanged at $17.97 on Feb. 16.