Carl Icahn Sets Sights on Controlling Netflix

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Carl Icahn wants to control himself some media companies badly. He spent almost two years trying to get a controlling share of Lionsgate, and now he wants to buy enough additional shares in Netflix to dictate the way the company goes, and it sounds like that’s selling out to the highest bidder.

New York-based Icahn paid $154.7 million for more than 4.2 million shares, which when coupled with the 1.3 million shares purchased Oct. 31, bring the investor’s total stake to more than 5.5 million shares for $323.6 million. That’s $58.4 per share, according to a Nov. 19 regulatory filing.

Should Icahn’s (or any other investor’s) stake in Netflix reach 10%, an automatic shareholder rights plan (or “poison pill”) kicks in, mandating that additional stock purchases cost $350 for one-thousandth of a share. The steep price is designed to thwart a hostile takeover.

Netflix enacted the shareholder rights plan after Icahn’s Oct. 31 stock purchase. The investor is renowned for buying shares in a company and then exerting pressure on management to make changes and/or sell the company.

Reed Hastings insists that the company is fine the way it is, and that it’s not for sale, and he’s right. Netflix is fine the way it is, for now at least. Icahn is definitely motivated by maximizing his share price and getting out, but unlike Lionsgate, who’s been doing quite well, Netflix is at a crossroads. Their current plan to produce new shows is a good one, as are their attempts to merge with Starz (which may now be open again since the collapse of Blockbuster), but if they can’t create their own content, if they continue to rely on ever-increasing contracts to license the studios’ intellectual property, they’ll be in trouble down the line. Netflix of course knows this and are likely taking steps to handle the issue. Will they be successful? Ask again later, but dumping the company to pad Icahn’s pocket is probably not the answer to a bright future for the streaming king.

Via: [Home Media Magazine]

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