Analysts See More Value in a Time Warner Breakup

Time Warner Inc., the largest U.S. media company, may be worth about 46% more if disgruntled shareholders led by Carl Icahn force a breakup of its assets.

The businesses, which include America Online and cable television systems, would be worth a total of at least $27 a share if they were separated, according to valuations by analysts including Michael Kupinski at A.G. Edwards & Sons.

Time Warner shares fell 30 cents to $18.24.

The shares are trading at 2002 levels, prompting Icahn, a shareholder and activist investor, to consider forming a group to press the board to spin off Time Warner Cable and other units. Icahn -- who owned 5.1 million shares, or 0.1%, of Time Warner as of March -- reportedly has told investors that shares may be worth $27 if the company also buys back as much as $15 billion in stock.

Icahn didn’t return calls seeking comment.

Chicago-based Harris Associates, Time Warner’s 12th-biggest holder with 71.1 million shares, also values Time Warner at $27, said Henry Berghoef, Harris’ head of research.

Time Warner shares had fallen 9.8% this year before reports that Icahn was buying. They have lagged behind the 1.6% rise in the Standard & Poor’s 500 index, even as Chief Executive Richard Parsons settled lawsuits and agreed to buy Adelphia Communications Corp. assets. The stock had jumped 5.6% in three days on speculation that Icahn was planning to challenge Parsons’ plans.

Separating assets would unwind a company built over 20 years and includes assets such as Fortune and Time magazines and the Cable News Network.

The company bought Ted Turner’s cable television assets for $7.3 billion in 1996. That was followed in 2001 by a $124-billion merger with AOL. The combination failed to generate the promised growth, and the shares have since tumbled by two-thirds. Time Warner last week set aside $3 billion for shareholder suits related to the transaction.

The board last week said it would buy back $5 billion worth of shares, its first repurchase since 2001, and Parsons plans to sell part of the cable business next year.

But some investors said Time Warner should remain intact.

Hal Vogel, chief executive of Vogel Capital Inc., sold his holdings of Time Warner on Tuesday. He is skeptical a break-up of the company would boost its value.