CARL ICAHN, the billionaire New York investor, is expected to secure the support of Time Warner’s biggest shareholder in his battle to oust the entertainment company’s management and break up its assets.

Wall Street sources told The Times that Capital Research and Management, the biggest institutional shareholder in Time Warner, was “dissatisfied” with the performance of its investment and was growing more sympathetic to Mr Icahn’s cause.

Capital Re, as the company is known, holds more than 5 per cent of Time Warner but has reduced its holding significantly.

The sources, who are close to Mr Icahn’s camp, indicated that Capital Re soon could declare its support for the dissident investors, a move that would more than double the number of shares owned by Mr Icahn’s backers.

Mr Icahn, who owns 60 million Time Warner shares, or about a 3 per cent stake, is planning to unveil his plans to break up the media and entertainment group at a meeting in New York on Tuesday afternoon.

He has been joined by other Time Warner shareholders, who between them own about 3.5 per cent of the company. If Capital Re joins them, the group could lay claim to more than 8.5 per cent of the group’s shares.

Mr Icahn still has a long way to go, however, before securing his stated goal of gathering indications of support from 50 per cent of Time Warner’s shareholders.

Last week Mr Icahn’s campaign enjoyed a brace of fillips as Frank Biondi, the former chief executive of Viacom, a rival entertainment group, declared that he would stand as chief executive of Time Warner if shareholders voted in favour of Mr Icahn’s plan. Mr Biondi’s membership of the dissident team lends credibility, as he is respected veteran of the American media and entertainment industry.

Aside from leading Viacom, Mr Biondi was once chairman and chief executive of Universal Studios and head of HBO, the cable channel owned by Time Warner that first aired such hits as The Sopranos, Sex And The City and Six Feet Under.

Less than a day after Mr Biondi joined the campaign, Mr Icahn revealed that Istithmar, an investment group backed by the Government of Dubai, had also joined his cause.

The company, whose name means “investment” in Arabic, has some $2 billion (£1.1 billion) under management but did not reveal how much of Time Warner it owns.

Tuesday’s meeting will be chaired by Bruce Wasserstein, the head of Lazard, Mr Icahn’s financial advisors in his so-called proxy fight against Time Warner. Lazard has been working on Mr Icahn’s proposed break-up plan since last November but has given scant details so far. It is expected that the Lazard plan will call for a merger of Time Warner’s America Online internet service provider and some entertainment assets with a small, as yet unknown, internet portal company.

The new group would include Time Warner’s film operations, cable networks such as Home Box Office, CNN and TNT, as well as AOL. Mr Icahn is also expected to call for a spin-off of the cable system, called Time Warner Cable, and the Time publishing arm.

Time Warner’s shares closed last week up a little at $18.40 after posting a strong set of fourth-quarter financial results. Mr Icahn believes that the company’s real value is in the region of $26 a share.

“We believe we can unlock tens of billions of dollars of value from this company, and support is growing,” a source close to Mr Icahn said.

Neither Time Warner nor Capital Re would comment.

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