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Icahn doubles Lions Gate stake

Activist shareholder spends $86.3 million acquiring shares in the TV and film studio.

October 21, 2008|Richard Verrier and Claudia Eller | Verrier and Eller are Times staff writers.

The barbarian is at the Gate.

Activist shareholder Carl Icahn has more than doubled his stake in Lions Gate Entertainment Corp., the independent film and TV studio behind the "Saw" horror movies and the cable shows "Weeds" and "Mad Men."

Icahn said in a regulatory filing that he spent $86.3 million acquiring Lions Gate shares, boosting his 3-year-old stake in the firm to 9.2%. It makes him the fourth-largest investor in Lions Gate behind MHR Fund Management, Steinberg Asset Management and Capital Research Global Investors, which has been a longtime investor.

Like many other media companies, the studio's stock has been buffeted by the turmoil on Wall Street, sinking to a 52-week low last week when it fell to $6.05 a share. Icahn previously held 4.29 million shares, or 3.7%, of the company, which is based in Vancouver, Canada, but operates out of Santa Monica. The additional purchase gives Icahn 10.8 million shares.

In a filing with the Securities and Exchange Commission, Icahn said his representatives held talks with Lions Gate Chief Executive Jon Feltheimer and planned additional discussions, but declined to specify what the talks were about. Icahn could not be reached for comment.

Lions Gate executives also didn't want to elaborate on the conversations. "We value Carl's input about strategic opportunities and have had dialogue with him about those opportunities," Feltheimer said. "However, there is nothing specific we can talk about at this time."

The move raises questions about Icahn's underlying motives for Hollywood's largest independent movie and TV studio, which has been the subject of speculation for years. Some company shareholders and industry analysts believe Lions Gate would benefit from a merger with a studio such as Metro-Goldwyn-Mayer Inc. or an acquisition by a major Internet giant such as Yahoo Inc.

"Maybe he has some insight into where Lions Gate might fit into the new media food chain," said Anthony Valencia, an entertainment and media analyst at TCW Group in Los Angeles.

Icahn is well known as an activist shareholder who isn't afraid to force management changes at firms he believes are underperforming. Two years ago, Icahn failed at an attempt to oust then-Chief Executive Richard Parsons from Time Warner Inc. and break up the media company. In 2005, Icahn won board seats at Blockbuster Entertainment, which led to a management shake-up and departure of its CEO.

Most recently, Icahn sought to oust Yahoo CEO Jerry Yang as part of a plan to effect a merger with Microsoft Corp. That effort was unsuccessful.

Last week, Lions Gate's board extended Feltheimer's contract until 2014, nearly three years before his current one expired.

"Despite the fact that [Icahn] is a corporate raider and an activist, this may be as simple as him seeing an opportunity to buy stock that he already liked, at substantially lower prices," Valencia said. "Or, he could be up to his old M.O."

Shares of Lions Gate rose 42 cents to $7.37.

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richard.verrier@latimes.com

claudia.eller@latimes.com

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