Bruce Wasserstein has joined Carl Icahn in his efforts to force “major restructuring” at Time Warner, adding new credibility and Wall Street muscle to a group of dissident shareholders as they take on the world’s biggest media company.

Lazard, the investment bank run by Mr Wasserstein, will conduct a detailed study of Time Warner and make strategic recommendations, possibly involving the sale of businesses. A proxy battle for board control could follow if the recommendations are not acted on by Dick Parsons, Time Warner’s chairman and chief executive.

Mr Icahn, who made his name as a corporate raider in the 1980s, said he would seek to replace a majority of the 12-strong Time Warner board at next year’s annual shareholder meeting.

By bringing Mr Wasserstein on board, Mr Icahn is hoping the mergers and acquisition veteran’s experience and connections will create more support for his cause among other Time Warner investors. Mr Icahn and three other hedge funds own less than 3 per cent of Time Warner.

Mr Icahn has already called on Time Warner to buy back immediately $20bn of shares and spin off 100 per cent of its cable business. Time Warner’s businesses also include Time Inc’s book and magazine publishing, the Warner Bros studios, the AOL internet business and cable networks such as CNN and HBO.

Mr Parsons has responded to Mr Icahn by increasing a buyback programme to $12.5bn from $5bn. However, he has defended the group’s conglomorate structure and is sticking to plans to spin off only 16 per cent of the cable group. Mr Parsons has said he believes AOL, the group’s internet arm, will be key to unlocking value.

Mr Icahn said he “continued to believe that Time Warner’s stock is greatly undervalued and that the company is in need of a major restructuring”.

Time Warner’s shares have underperformed the stock market, in line with its media peers. Investors are concerned by the lack of growth in traditional media sectors and the threat to business models of the rapid growth in digital distribution.

Lazard is expected to complete its analysis by January.

Time Warner said its board and management were “confident that we are taking the right steps to deliver sustainable value and a highly competitive return to all of our shareholders”.

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