Lights! Camera! Icahn!
It was only a matter of time before Hollywood was on the receiving end of some old-school corporate Kick Ass. We speak of the arrival of Carl Icahn as hostile bidder for Lionsgate Entertainment, the studio that released the teen superhero movie that led the box office when it opened two weekends ago.
Mr. Icahn has been circling Lionsgate for a couple of years, and now has made a bid for the entire company. From its beginnings in Canada, where it is still legally based, Lionsgate has been something of an anomaly in Hollywood—an independent mini-studio that is publicly traded and has not been snapped up by one of the majors.
In addition to releasing Tyler Perry movies, various slasher fare, Best Picture winner Crash and the acclaimed Precious, Lionsgate has proven adept at putting cable shows like Weeds, Mad Men and Nurse Jackie on the air. The story line with Lionsgate has long been that it would be only a matter of time before the company was absorbed—but Mr. Icahn is not what it had in mind. These are tense, deal-averse times in Hollywood, as witnessed by the drawn-out auctions for Metro-Goldwyn-Mayer and Miramax (both of which, incidentally, Lionsgate looked at).
Hollywood is a natural place for the feisty raider-cum-activist. For one thing, Mr. Icahn is far more entertaining than just about anyone in the business; he has made a career of ferreting out vulnerability and hypocrisy in corporate America and often making a buck for the trouble he causes; he and Mike Bloomberg typically vie for the title of richest New Yorker.
Valued at less than $1 billion, Lionsgate is relatively small quarry for Mr. Icahn, which has led to plenty of speculation that at least part of his interest stems from a desire to install his 30-year-old son, Brett, on its board—something that he had proposed as early as February of 2009, according to a Lionsgate investor presentation.
The bidder’s self-interest aside, Lionsgate does have elements of a typical Icahn target. Over the past decade, the company’s stock has performed well when measured against the S&P index and many other entertainment companies—but over the past five years, the chart is pretty dismal, and some of its deals, have drawn skepticism. Plus, Mr. Icahn accuses the company of being top-heavy, and if there is one thing Uncle Carl does not abide, it is executive excess. Lionsgate has not shied away from its fight with Mr. Icahn, and its Bentley-driving CEO, Jon Feltheimer, has fought an adroit public-relations war that has included duking it out (metaphorically) live on CNBC with his antagonist and drawing support from influential media investor Gordy Crawford, who told the Los Angeles Times, “I believe this is a very well-run company and all Carl is doing is running up legal bills, distracting management and doing nothing productive for shareholders.”
Of course, we’ve seen this show before, most memorably four years ago, when Mr. Icahn made his famously unsuccessful run at Time Warner, or even a couple of years back, when he injected himself into Yahoo’s convulsions with Microsoft and ended up, briefly, on its board. Lionsgate has painted Mr. Icahn as someone who doesn’t understand the entertainment business. While the Lionsgate side goes to pains to show how smartly they have structured their deals and mitigated risks, Mr. Icahn pointedly uses the words “$75 million Ashton Kutcher vehicle” (in reference to Lionsgate’s upcoming Killers) to rest his case for incompetence.
To say, as Lionsgate does, that Mr. Icahn makes contradictory statements about what the company ought to be doing differently is to miss the point of the exercise: that Mr. Icahn will keep needling and poking and has the money to put where his mouth is, regardless of what is coming out of it. Mr. Feltheimer and his colleagues know good theater when they see it, but this is undoubtedly not their idea of a good time.
And whether he gets Lionsgate, could somebody at CNBC please try to get Mr. Icahn his own reality show?