Time Warner, Icahn reach accord

SAN FRANCISCO: Time Warner Inc. and billionaire Carl Icahn on Friday said they had reached an accord, signaling an end to an acrimonious and public battle over the future of the world's largest media company.

Time Warner said its board had agreed to repurchase as much as $20 billion in stock and would consider electing two new directors, seeking Icahn's advice in the process.

Time Warner also said it would implement $1 billion in cost savings and continue to review a report commissioned by Icahn and prepared by Lazard Ltd, which investigates ways to overhaul the company. That left room for more changes, including for Time Warner Cable, the companies said.

In return, Icahn Partners will not contest the company's slate of directors, Time Warner said.

Icahn last week had proposed to split Time Warner into as many as four independent companies and replace the entire board of directors. This week he said he planned a more modest approach including a slate of five directors.

"We are very pleased to have reached an understanding with Mr. Icahn," Time Warner chairman and chief executive Dick Parsons said.

Shares of Time Warner rose 26 cents, about 1.5 percent, to $18.04 in after hours trade on Inet.

Pali Research analyst Richard Greenfield said the deal represented a compromise. "They reached a mutually acceptable agreement," he said.

Time Warner will continue discussions with Icahn, as well.

"Management's view continues to be that a different capital and corporate structure may be appropriate for Time Warner Cable in the future so long as it provides strategic flexibility with the company's content businesses," Time Warner said.

The media giant said that it had begun a comprehensive cost review that resulted in at least $500 million of cost reductions that are reflected in its current operating plan for 2006.

New York-based Time Warner said it will also aim to achieve equivalent reductions against planned expenses in 2007, leading to the $1 billion reduction over the two-year period.

The board authorized a stock buyback of as much as $20 billion through Dec. 31, 2007.