The board of Lions Gate Entertainment Corp. is the latest to tussle with financial agitator Carl Icahn over its directionand now the board and its activist shareholder are quibbling over who was first to stop talks about Icahn getting to designate some board members. Icahn, who has taken on Time Warner (NYSE: TWX) and Yahoo (NSDQ: YHOO) in this space alone, said he stopped the discussions over a so-called "standstill agreement" that Lions Gate wanted to implement as part of any deal; that would make it harder for a hostile takeover to occur. Lions Gate Co-Chairman and CEO Jon Feltheimer and Vice Chairman Michael Burns issued a statement saying they stopped after three weeks of discussions with Icahn "to consider how we could accommodate some of his requests, including the possible appointment of his designees to the Board of Directors" because "the Board ultimately concluded that it could not meet his requests and continue to serve the best interests of all of our shareholders, which is our number one priority." Icahn is expected to push for the sale of the studio's lucrative library and possibly even to sell the whole company.
As of the last SEC filing in February, Ichan has accumulated 14.28 percent of Lions Gate's outstanding sharesa stake worth about $82 million at the day's close of $4.96. (The stock is trading up after hours as buyers look to an Icahn campaign; its 52-week high was $10.97 per share.) That makes him the third-largest shareholder after MHR Fund Management (19.4 percent) and Steinberg Asset Management (14.6 percent); Reuters points out that MHR is run by for Icahn investment chief Mark Rachesky.
Lions Gate, the largest indie studio left, has made some interesting choices in the digital space with Feltheimer as CEO, including:
partnering and investing with Viacom (NYSE: VIA), Paramount and MGM in a new premium channel, Epix, that will launch on broadband and has yet to be picked up by any multichannel operator.
Acquiring the TV Guide Network and TV Guide Online from Macrovision (NSDQ: MVSN) for $255 million. The studio said it will use the network to show off its deep library of 12,000 plus movies and TV shows, plus current films and shows.
Reuters: "Some analysts and investors expect Icahn to now launch a campaign to install his own board that would include his son Brett, and advocate for a sale of certain Lions Gate assets, such as its valuable film library, or even an outright sale of the company. Lions Gate's library of more than 8,000 films and 4,000 TV shows is considered its most valuable asset, generating $275 million in annual revenue and $100 million in free cash flow."
By Staci D. Kramer