Split decision for TW?
Parsons under pressure as Icahn pushes spinoff
He finished the job earlier this month, setting aside $3 billion to settle massive merger-related shareholder lawsuits.
But there wasn't much celebration.
Investors started right in, asking if Parsons, the respected mop-up man, could become Parsons, the visionary. Could he grow TW and its stock price in an uncertain world where media congloms have been decidedly out of favor?
Corporate raider Carl Icahn thinks not. And he's pushing his opinion in a vigorous PR campaign urging Parsons to spin off 100% of the cable and publishing businesses.
Icahn figures that breaking the conglom up, a la Viacom, is the only way to create shareholder value -- meaning the parts will be worth more than the whole.
Icahn and his allies aren't likely to approach the stockholding they need to force change, but they sure can make headlines -- ones that tend to resonate on the Street as TW shares stall.
"Time Warner's made of great companies, but it's not a great conglomerate. It never functioned as (former CEO) Gerry Levin meant it to," says analyst Michael Nathanson of Sanford C. Bernstein.
He agrees that cable, at least, should be spun out completely -- not just the 15% of it TW has talked about selling to the public.
TW reps insist "management is committed to and focused on building shareholder value."
And Parsons still has a loyal following on the Street.
"Parsons was the right guy at the right time" post-AOL. "Is he the wrong guy now? Maybe. But I underestimated him once. I don't want to do it again," says one fund manager.
TW shares fell for two days running, after a bump-up on news of Icahn's latest campaign. That means Wall Street, at least so far, doubts Icahn can usher in a quick fix.
Icahn has forced changes at a number of big companies, but his recent foray into showbiz has been a flop. He took a large stake in Blockbuster and a board seat, even as the vidtailer swung to a loss last quarter. The rental biz is shrinking and the outlook is grim.
Blockbuster's a "disaster," says one investor. "Icahn got on the board. He's nowhere near that (influential) at Time Warner."
