updated 12/1/2005 11:23:25 AM ET 2005-12-01T16:23:25

Carl Icahn, the billionaire financier who is taking on Time Warner Inc., ratcheted up his rhetoric against the giant media conglomerate Wednesday, threatening to sue its directors if they make a deal for AOL that Icahn finds unacceptable.

Icahn, speaking at an annual corporate governance conference in midtown Manhattan, made the remarks a day after disclosing that he had hired the investment bank Lazard Ltd. to advise him in his campaign to shake up Time Warner.

Icahn said he would go after Time Warner’s directors if they cut what he considered a poor deal for AOL. Time Warner has been holding exploratory talks with companies including Microsoft Corp. about a potential investment in or sale of AOL, which has become a hot property because of its booming advertising sales and ability to draw in large audiences online.

AOL had been seen as a burden on Time Warner for several years because of its declining base of dialup Internet subscribers. Time Warner’s purchase by AOL in 2000 resulted in massive writedowns, regulatory investigations and a management purge.

“I’m going to hold the board of Time Warner personally responsible if they give away AOL the wrong way for the wrong reasons,” Icahn said at the conference, which was hosted by the New York Society of Security Analysts and the Certified Financial Analyst Institute. “I believe there’s personal liability.”

Time Warner declined to comment on Icahn’s latest remarks. On Tuesday, the company said in a statement that it was “confident that we are taking the right steps to deliver sustainable value and a highly competitive return to all of our shareholders.”

Icahn leads a group of investors who hold a nearly 3 percent stake in Time Warner. They are pressing for radical steps to boost the company’s lagging share price, including a large buyback of shares and a complete spin-off of the company’s cable division.

In addition to cable and AOL, Time Warner’s vast array of other media properties includes HBO, CNN, Warner Bros. and a major magazine publisher, Time Inc., whose more than 100 magazines include Time, People and Sports Illustrated.

The company has announced a share buyback, and recently raised the amount of shares it would repurchase from $5 billion to $12.5 billion. It also plans a partial spin-off of its cable division.

Icahn said Tuesday he would nominate directors for Time Warner’s board at its next annual meeting, but he declined to comment Wednesday on who he had in mind.

Icahn has built a formidable reputation on Wall Street as well as a sizable personal fortune by taking on companies and agitating for change in hopes of boosting the share price — although his campaigns are not always successful, such as his recent run against Blockbuster Inc.

“I am an obsessive personality, with a sense of outrage, so I keep doing this,” Icahn said. “Old soldiers never die — they just fade away.”

Time Warner’s shares initially rose after Icahn’s campaign against the company became public in August, but they have remain stuck in a tight range since then and have failed to rally on Icahn’s latest salvos.

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