August has been very good to Lionsgate -- and that could be very bad for Carl Icahn's bid to take the entertainment company over.
The studio, which spent much of the year mired in a drawn-out proxy fight with the billionaire investor, has dominated the box office as summer draws to a close.
(See latest story: "Icahn Revises Tender Offer to Lionsgate; Now at $7.50.)
Over the past three weeks, the mini-major has competed handily with the majors, thanks to two hit films, “The Last Exorcism” and “The Expendables.” The string of good fortune comes after largely sitting the summer out last year.
That's not all.
“Kick-Ass,” which debuted on home video this month, has been one of the company’s biggest selling titles on DVD and Blu-ray. And the company’s television arm has carved out a niche for itself, producing critically beloved water-cooler shows such as “Mad Men,” "Weeds" and “Nurse Jackie,” which raked in seven Emmy wins for Lionsgate on Sunday night.
Then there’s the $1 billion streaming deal that Epix, the fledgling cable channel Lionsgate helped found, recently signed with Netflix.
“They’re on their game now,” Marla Backer, a media analyst with Hudson Square Research, told TheWrap.
Not that Lionsgate is getting much love on Wall Street. Despite spinning the ultra-low budget “Last Exorcism” into a $20 million opening over the weekend, Lionsgate’s shares were trading at $6.49, down 1.8 percent as the markets closed on Monday.
The culprit is Icahn, and the slash-and-burn campaign he’s been waging against the company’s management team for control.
“People don’t want to mess around with Carl. There are not a lot of shares to trade, and people don’t want to get involved until this plays out,” Matthew Harrigan, a media analyst with Wunderlich Securities, told TheWrap.
Icahn, who did not respond to requests for comment, has tried to portray himself as a white knight in his turf war with the studio’s management.
Following the June box-office failure of “Killers,” a $75 million action comedy with Ashton Kutcher and Katherine Heigl that brought in a lowly $47 million domestically, the billionaire investor charged that the studio was directionless.
He portrayed his tender offer as his only means to protect his and others' investment.
“[Icahn] has said that from his point of view his actions have supported the stock, but in reality he’s constrained it,” Backer said. “It's an unfair situation, because the studio has had a bunch of home runs, but with Icahn hanging over everything, they won’t get credit for it in the stock price.”
Still, a strong corporate performance may be the best defense against an Icahn-led takeover. It’s also the best chance that the leadership team of CEO Jon Feltheimer and Vice Chairman Michael Burns have of keeping their jobs. Icahn, who controls more than 30 percent of the company, has vowed to clean out the executive suite if he gains control.
