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Icahn Slams Lions Gate Directors, Cites Secular Decline in Film Library Values

Strategic Insights

— 1 min read

Lions Gate Entertainment Corp.'s directors have failed shareholders, according to Carl Icahn, who has made a hostile bid to buy the studio for $6 a share. Icahn's criticism comes as Lions Gate prepares to bid on Metro-Goldwyn-Mayer Inc. and Miramax, which includes a 700-movie library featuring films like Pulp Fiction, Chicago, and No Country for Old Men. Icahn argues that film-library values are in a secular decline, and that the current board will allow the company to borrow billions to pursue a new vision of library consolidation.

Key Takeaways:

  • Carl Icahn, Lions Gate's second-largest shareholder, has launched a hostile bid to buy the studio for $6 a share, which the company has rejected as "financially inadequate and coercive."
  • Icahn has accused Lions Gate's directors of failing shareholders and not holding CEO Jon Feltheimer accountable for a "meaningful vision" that has resulted in stagnant stock prices.
  • Lions Gate has put in a second-round bid for MGM this week, despite Walt Disney's plans to sell Miramax and its 700-movie library.
  • Time Warner's $1.5 billion offer for MGM is higher than Lions Gate's bid, according to an insider.
  • Icahn owns approximately 19% of Lions Gate, and has stated that film-library values are in a secular decline, which will not return to cash flows seen during the heyday of DVD sales.
  • Icahn is concerned that the current board will allow the company to borrow billions to pursue a new vision of library consolidation.
  • Lions Gate's stock price has remained stagnant for years, with the company's share price only increasing by 26 cents to $6.25 in NYSE trading on Thursday.

Statistics:

  • $6: the amount of Icahn's hostile bid to buy Lions Gate
  • 700: the number of movies in Miramax's library
  • $1.5 billion: Time Warner's bid for MGM
  • 19%: the percentage of Lions Gate owned by Icahn
  • 6.25: the current share price of Lions Gate
  • 26 cents: the increase in Lions Gate's share price on Thursday
  • March 19: the date of Icahn's latest offer for Lions Gate
  • NYSE: the exchange on which Lions Gate's shares are traded

Sources:

  • Bloomberg News
  • Investor Carl Icahn
  • Lions Gate Entertainment Corp.
  • MGM ( Metro-Goldwyn-Mayer Inc.)
  • Walt Disney Co.
  • Time Warner Inc.

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