Time Warner investor Carl Icahn argues the company's board needs new members.

NEW YORK (CNN/Money) - Financier Carl Icahn launched a new attack Tuesday against the management of Time Warner Inc., arguing in a letter to shareholders that the media company's board needs new outside directors due to past mistakes.

The letter, which was included in a Securities and Exchange Commission filing by Icahn early Tuesday, said the board is not taking enough steps to enhance shareholder value. It stopped short of proposing a slate of new directors at the media conglomerate.

"With respect to whether a new voice for shareholders on the board is necessary, we believe a review of the company's stock price performance and the record described above should effectively end any argument that the board is doing an adequate job and should be left to its own continued devices," he said in the letter.

"Given the fact that, despite its exceptional assets and a generally favorable operating environment, the company's stock price has underperformed significantly since 2002, we believe the time for steps to make the board and management more accountable are long overdue," Icahn said.

In an indication that Time Warner (Research) might respond to one of Icahn's demands, the company is considering raising its Time Warner Cable spin-off stake to as much as 25 percent from the current 16 percent, Reuters reported Tuesday, citing a source familiar with the matter. However, Icahn says he wants all of the nation's No. 2 cable operation in his bid to maximize shareholder value.

Reuters said Time Warner declined comment on its report.

Icahn and a group of other shareholders have stated they own about 2.6 percent of Time Warner shares. They have stepped up pressure in recent months for management to take steps they say will help shareholder value, including a $20 billion buyback of the company's. The company plans a $5 billion buyback.

Discussions over the size of the spinoff were revisited shortly after Icahn went public with his demands in mid-August, the source told Reuters.

Time Warner said in a statement that company executives "look forward to sharing our next steps with our shareholders in the coming weeks." It said that management has been focused on taking steps to improve share price.

"We greatly improved the financial health of the company by selling low-return businesses, reducing debt, stabilizing AOL, and made significant progress in resolving the company's legal challenges," said the company statement. "With the company stable and strong, we are focused on continuing our efforts to build sustainable long-term value."

Time Warner's 15-member board has 11 members considered outsiders, according to the company's proxy statement. Each director is serving an annual term. The elections are held in May. Icahn's letter suggests this could be the first salvo of a proxy fight to replace some or all board members.

"In the coming months we will be continuing to speak out about our belief in the need for a new voice for shareholders on the board of Time Warner," the letter concludes. "We already know that many of you agree and look forward to communicating with you in the future."

Icahn's letter blames the board for approving what he says are past missteps, including the merger between Time Warner and America Online in 2001 and the sale of some assets, including Warner Music and a 50 percent stake in cable network Comedy Central. He termed both sales to be "fire sales," and he said both assets have appreciated more than 80 percent since sales in 2003.

He also criticized the company for not buying movie studio Metro-Goldwyn-Mayer, which was purchased by Sony (Research). And he said the company's cost structure is bloated, pointing specifically to the company's New York headquarters that opened in 2004, which cost an estimated $800 million.

"Given this extravagance and the failure to cut costs at businesses like Warner Music described above, we intend to hire, in the next few weeks, an industry consultant to analyze and compare Time Warner's costs to its peers on a number of different levels to determine what other excess fat may lie in the company's cost structure, including, but not limited to, perquisites afforded to the board and top management," he said.

Icahn said that 12 of the 15 members of the board voted to approve the merger between Time Warner and AOL, either from their position on the AOL board or the Time Warner board at the time the deal was announced in January 2000.

"The lingering presence of these individuals forces us to ask, why are a majority of the same directors who signed off on the disastrous AOL merger still steering the corporate ship?" said the letter.

The company's major business units include AOL, Time Warner Cable, networks, which includes CNN, TNT and HBO, publishing, which includes Time Inc. magazines, and filmed entertainment, which includes studios Warner Bros. and New Line Cinema. CNN/Money is a unit of Time Warner.

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For Time Warner's official response, click here.

Read the full text of Icahn's letter here.