The value of Carl Icahn’s stake in Time Warner, the world’s biggest media company, is back in the black following a rally in the US cable sector. Analysts are expecting that the company’s results on Wednesday will offer a further boost.

Time Warner’s share price fell steadily after the billionaire activist called off his efforts to seek board control and push for a break-up of the company.

The decline was particularly painful for Mr Icahn, as the 1.35 per cent stake he accumulated was worth less than he paid for it. Most of his stake was believed to have been acquired last August, at just over $17 per share. The three other hedge funds who teamed up with him own a further 2 per cent of Time Warner shares. “It’s a relief that we are at least even again,” said one of the hedge funds.

“Although it was a long-term investment, it was still difficult to see it in the red because it is a large position for all of us.”

Now, with stock market investors casting off some of their negative views on cable companies in light of the strong take-up of their bundle of video, internet and telephony services, Time Warner’s shares are up again. They were trading on Tuesday at $17.29.

The moves follow strong results from rival cable operators. Comcast, the biggest US cable operator, last week reported better-than-expected results, sending its shares higher and giving the whole sector a lift.

Time Warner’s results today are expected to show another strong performance for Time Warner Cable. The division accounts for about 40 per cent of the value of the company, which also owns AOL, the Warner Brothers and New Line studios, the Time magazine business and cable groups such as HBO and CNN.

In a recent interview with the FT, Dick Parsons, chairman and chief executive of the group, said the strong performance of cable could drive the share price higher and he planned to emphasise this in the coming months.

Time Warner Cable is preparing to complete its acquisition of Adelphia, a bankrupt operator. As part of the deal, 16 per cent of Time Warner Cable will be spun off.

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