NEW YORK (CNNMoney.com) - Carl Icahn has given up his plan to seek control of media company Time Warner, according to a news report Thursday.

The report in The Wall Street Journal online edition cited signs of a possible settlement between the activist shareholder, who leads a group that owns more than 3 percent of Time Warner's stock, and management at the company. Icahn has been highly critical of management, most notably Time Warner CEO Dick Parsons, for the past few months.

Time Warner CEO Dick Parsons has been the subject of much criticism of shareholder Carl Icahn.

Time's up? Shares of Time Warner have underperformed the market, prompting Carl Icahn to propose a breakup of the company. What's next for the stock if Icahn backs off?

The news comes as Icahn was supposedly ready to submit a slate of candidates for Time Warner's board for shareholders to vote on at the company's next annual meeting.

Last week, Icahn and investment bank Lazard issued a report proposing that the world's largest media company be split into four parts and said he would soon announce nominees for the board. But many large institutions that own Time Warner stock said they were not in favor of the breakup plan, making any chance of forcing a breakup unlikely.

Still, some were surprised to hear that Icahn may be abandoning the fight so soon, especially since he has shown a history of tenaciously battling corporations until he got what he wanted.

"It would have been interesting to see how this would have played out," said Donald Margotta, associate professor of finance at Northeastern University in Boston. "But regardless of how Time Warner turns out, I think this is a prelude of more to come. Icahn will find other targets."

According to the Journal report, which cited people familiar with Icahn's plans, the investor is now considering nominating only five candidates to Time Warner's board as opposed to a full slate. (Time Warner is the parent company of CNNMoney.com.)

Fred Lane, chief executive officer of Lane, Berry & Co., a Boston-based investment bank, said it was wise for Icahn to back away from a full-blown proxy fight since many on Wall Street did not believe New York-based Time Warner should be split up.

Lane added it would actually be worse for management to have to deal with such a battle given the intense changes and competition in the media sector. Shares of Time Warner and rivals such as News Corp (Research)., Walt Disney (Research) and Viacom (Research) have all lagged the market during the past year.

"This is not some inept management team. Obviously the company is in interesting markets that are under a lot of competitive pressure," said Lane. "To me it's not clear that Parsons has done a bad job. Actually, there is evidence that Parsons has done a good job. Now is not the time to be distracting management."

But one analyst said Icahn's attacks did some good for Time Warner shareholders.

Thomas Eagan at Oppenheimer & Co. said Time Warner probably did a few things more quickly than it otherwise would have to appease Icahn, including boosting its stock buyback program, deciding to sell Time Warner Books, and promoting well-respected executive Jeffrey Bewkes to president and chief operating officer, putting him in line to succeed Parsons as CEO.

"Although Icahn's efforts have certainly been a distraction, the upside is that it likely accelerated many of the events that the company was thinking about anyway," Eagan said.

Representatives for Time Warner, Icahn and Lazard declined to comment on the report.

Shares of Time Warner (Research) were flat in regular New York Stock Exchange trading and dipped modestly in after-hours trading.

For more about big shareholders' objections to Icahn's plan, click here.

For more about Icahn's proposal to split up Time Warner, click here.

Oppenheimer's Eagan owns shares of Time Warner but his firm has no investment banking relationship with the company.

The reporter of this story owns shares of Time Warner through his company's 401(k) plan.