Power Struggle and Low Stock Prices at Lionsgate

I've been paying a little more attention than some of the other online movie journalists when it comes to the conditions at the studios themselves. Of late, I'd say that Universal gets the highest marks, cutting out Rogue Pictures for $150 million and then backing out of the DreamWorks deal that would have cost them that $150 million. It's been rough for Disney lately, which we've chronicled several times, and now there's more evidence that Lionsgate is shaky at best. Backing up a few months, Wall Street investment bank Caris & Co. warned its customers against buying the studio's stock. Much of the reason for that was a rather slow 2008 for Lionsgate, which ended with three straight bombs. Less than a week later, the studio was linked to a deal to acquire the TV Guide Network, a useless entity in the digital cable world, since cable companies already have their own channel guide. Then company president Tom Ortenberg split for The Weinstein Company, and a week after that, Lionsgate was rumored to be in the running to buy Summit Entertainment. That's a lot of activity, but unfortunately, none of that is box office activity. My Bloody Valentine did pretty well, and the new Madea movie is the biggest one in that franchise, but the stock has been immune from that success and a recent Wall Street rally, dropping to $4.69 a share today, close to a 52-week low. Enter Carl Icahn, who has been a corporate marauder for decades. The Hollywoood Reporter says that Icahn has been slowly gobbling up Lionsgate stock (14.5% in all) and earlier today offered to buy $325 million of Lionsgate's debt, though it's unclear what Icahn really wants with the property. It's believed that one objective may be nepotism, with Icahn's son, Brett, rumored to be in position for a board seat if the deal goes through. But the fight is apparently getting nasty. "I'm surprised that both parties let it get this contentious," RBC Capial Markets media analyst David Bank told The Los Angeles Times. "He's either going to walk away or get more activist. It's more likely this is paving the way for some sort of proxy fight." Should Icahn strongarm his way into power, it's believed he wants to cut 20 - 30% of the company's $150 million annual overhead. There's no word yet on how the deal might impact Lionsgate's theatrical products.

Comments

[investing stock]

nice post!