Carl Icahn, one of Wall Street's most feared corporate raiders, has taken off the gloves and ratcheted up his war with Hollywood's largest independent movie and television studio.
Breaking his silence Thursday for the first time about his displeasure with the management of Lions Gate Entertainment Corp., Icahn blasted the film and TV studio's recent $250-million acquisition of TV Guide Network and TVGuide.com, saying it "borders on recklessness," and branded the company for what he described as its excessive overhead.
He also said in a regulatory filing that he plans to make an offer to buy much or all of the company's convertible debt -- notes that can eventually be turned into stock.
On Wednesday, Icahn broke off talks with Lions Gate about gaining several seats on its 12-member board. Lions Gate had agreed to grant Icahn some seats, but the negotiations unraveled over the terms of a so-called standstill agreement, which would have limited his ability to increase his stake in the company.
Icahn, who now owns 14.5%, said he had agreed not to tender an offer for the common stock or initiate a proxy fight -- common elements of a hostile takeover.
"It broke down because they refused to make the same standstill agreement applicable to any large shareholder they might give board representation to in the future," Icahn said in a phone interview from New York on Thursday.
He said he was surprised Lions Gate balked: "After spending all that time negotiating, I think it was shortsighted on their part."
People close to the situation said that Icahn resisted the standstill agreement because he was worried that his former investment chief, Mark Rachesky, who owns just under 20% of the stock, might make a play for the company.
Lions Gate executives would not respond publicly to Icahn's accusations.
Chief Executive Jon Feltheimer and Vice Chairman Michael Burns, who have been running Lions Gate for nine years, are under pressure from Icahn to reduce costs at the Canadian company, which operates its movie and television studio out of Santa Monica.
After reporting a third-quarter loss of $93.4 million last month, largely attributable to the weak performances of its movies, Feltheimer and Burns said the company planned to reduce the number of films its released each year and promised to slash more than $200 million of production and marketing costs.
