Billionaire investor Carl Icahn (search) on Monday demanded Time Warner Inc. (TWX) separate its cable business and buy back at least $20 billion worth of its stock, and disclosed that he has organized a consortium of shareholders that currently holds about 2.6 percent of shares.

In one of his most audacious moves of late, corporate raider Icahn, whose hostile takeover of TWA in 1985 is legend on Wall Street, said he plans to meet with Richard Parsons (search), CEO of Time Warner, the world's largest media company, this week. They will discuss their views on improving the company's financial standing, a statement said.

Shares rose 1.21 percent in early trading.

While Icahn said that management has done what he called "a commendable job managing each of their various businesses," he criticized it for having not proposed measures which could enhance shareholder value.

A spokesman for Time Warner said the company would meet with Icahn. "Our board and our management are committed to creating long-term value for all shareholders and we've been on a course that demonstrates that commitment," the spokesman said.

"We have a process in place in which we carefully review the range of options available to realize that value," the Time Warner spokesman said. "We would, of course, speak with any interested shareholders who have relevant thoughts or perspectives and in that context we have informed Mr. Icahn that we would be happy to meet with him."

One investor said Icahn's demands, which might have had more impact during Time Warner's more fragile moments, are viewed as late and unnecessary at a time when Time Warner's CEO has won accolades on Wall Street for rescuing the company from financial ruin.

"Things that needed to get done, the management has done," said Larry Haverty, a portfolio manager at Gabelli Asset Management, which owns 275.6 million shares of Time Warner as of the end of 2004.

"It's the wrong time to do anything that's tax inefficient and (that could) subject owners to any unnecessary financial risks," Haverty added, referring to Icahn's calls to Time Warner to buy back up to $20 billion in stock, up from its current commitments of $5 billion.

Time Warner would have to borrow to buy back its stock to the levels Icahn's group demands during a time when interest rates are expected to go higher, Haverty said.

He added, "If you're running a media company, you have to have fuel for acquisitions as they come along."

Among his proposals, Icahn wants the media company to separate its cable business from its other businesses. Time Warner is expected to close a joint deal with Comcast Corp. (CMCSA) to buy Adelphia Communications Corp. (ADELQ) by early next year.

At that time, Time Warner is also expected to spin off its cable business, but retain more than 80 percent of its ownership.

Icahn, who has a history of calling for reform at companies in which he is an investor, also said in his statement that he and a group of investors hoped to hold talks with other large Time Warner shareholders about his views.

He also said that the hedge fund group has agreed not to sell its Time Warner holdings until February 2007, or the date of the next annual meeting. The other hedge funds involved with Icahn include Franklin Mutual Advisors (search), JANA Partners and S.A.C. Capital Advisors.

Icahn said each member of the group has notified the company of their intentions to purchase "in excess of" $500 million of Time Warner's stock.

Time Warner shares gained 22 cents to $18.46 on the New York Stock Exchange, closing in on its 12-month high of $19.85.