Icahn lashes out at 'abysmal' Time Warner

Damning Mr Parsons with faint praise yesterday, Mr Icahn said he was a "nice guy", but "not the guy to run the company". Reflecting the growing antagonism between the two sides, Mr Icahn likened Time Warner's management to "morons" this week, and said Time Warner was the "poster boy" for mismanagement of American companies.

The corporate raider, who is famous for spotting undervalued companies and forcing their boards to adopt his strategies, has hired the investment bank Lazard to orchestrate a campaign to win control of Time Warner's board.

Bruce Wasserstein, Lazard's chairman, and Mr Icahn are understood to be approaching media industry executives to join a slate of eight rival board directors to stand against its current board at Time Warner's annual meeting . The names of the candidates must be submitted to Time Warner by the end of January.

Time Warner's board determines if the rival candidates are qualified to run. Then both sides submit proxy statements to the Securities and Exchange Commission at the end of March. In the spring, after the proxies are filed, both sides can campaign for 60 days prior to the meeting. The meeting is usually held during the third week of May.

Mr Icahn has, with his associates, built up a stake of just under 3 per cent in Time Warner. He wants Mr Parsons to spin off all of the company's cable operations and to buy back $20bn of shares in order to boost the company's share price. Mr Parsons has agreed to repurchase $12.5bn of shares and to sell a minority stake in its cable arm.

Mr Icahn has also expressed unhappiness with Time Warner's plan to spin off part of its internet arm, America Online. The company is talking to both Microsoft and Google about selling a stake in AOL.

Mr Icahn said: "I'm going to hold the board of Time Warner personally responsible if they give away AOL for the wrong reasons."