Tuesday, 17 March 2009

Hollywood Babble On & On #251: The Siege of Lionsgate Update

Corporate raider Carl Icahn's siege of Lionsgate Entertainment has entered a new stage. The management has rallied their own troops for the fight.

And it seems that one of their strategies is to use public relations to either somehow win the other shareholders, and their proxy votes, over to their side, or badmouth Icahn into submission. Their public relations strategy looks like it will be taking two tacks...

1. They seem intent on painting the takeover of Lionsgate as some sort of present by Carl Icahn to his son Brett Icahn.

2. The Lionsgate management will try to portray Icahn as intent on liquidating the company, casting its employees into the wilderness, and scattering its assets into the winds.

Here's what I think about those tacks...

1. I don't know much about Brett Icahn, except that he's a Princeton grad, a financial analyst, has some experience in managing investment funds, and a reported interest in entertainment and media related business. Icahn
pere may have every intention of putting the young man on the board, and even in a position of authority in the management. The Lionsgate management seems to be banking on presenting Icahn fils as some sort of rich brat, as spoiled as month old milk, threatening to hold his breath until daddy gets him his own movie studio.

I don't know young Master Icahn, but if Brett Icahn
doesn't fit the image that the Lionsgate Management wants to create, and shows intelligence, and some talent for business in general and show business in particular, this strategy could easily blow up in their face, and make the Management faction look petty, and small.

Remember, a lot of senior people in Hollywood got to where they are by being related to, or having something extortable on, someone in a position of influence. I guess the lesson the Lionsgate management should remember is that
people in glass Malibu beach houses shouldn't throw stones.

2. Icahn does have the option of selling off the pieces, and if he succeeds in taking over the company, that is his right. But it may not be his intention, I wrote a piece about this before, but I will summarize it here.

Lionsgate's assets have some value, but right now, with the market down, and people being leery of getting involved in showbiz deals, he won't be maximizing his value if he sells off those assets.

Icahn can counter these attacks by explaining his desire to make the company a profitable concern, and presenting the management as not only blocking this desire, but accuse them of using the company as their particularly glamorous private playground. Thus recasting the Lionsgate Management as the bad guys.

So as you can see, these tactics may seem smart, but they have the potential of backfiring badly on Lionsgate Management.

Things are getting even more interesting with every development.

No comments:

Post a Comment