Icahn and Lionsgate CEO exchange open letters in wake of hostile takeover bid

By Sarah Sluis

Forget Twitter fights and Facebook flame wars. As Carl Icahn attempts to take over Lionsgate, the duo has resorted to an old school trick: the open letter.

Icahn released a letter, posted on Variety, criticizing Lionsgate's strategy. Referring to CEO and Co-Chairman Jon Feltheimer, he argued that "hand-picked boards let self-proclaimed 'visionary' CEOs chase their vision indefinitely, even when years pass and their vision is clearly a delusion." Ouch. Lionsgate's stock has remained stagnant for the past several years; therefore Icahn believes the CEO needs to be replaced.

It gets better. Feltheimer wrote back, calling the attack an attempt to divert from the fact that Icahn offered a lowball stock offer, explaining the company's corporate strategy, and pointing out their big movie hits and 70% profitability rate.

Both sides have convincing arguments but the complexity of the situation makes it hard to know who is right. Icahn has access to the company's financial information, as well as whatever strategy the company reveals at shareholders meetings. He's been particularly critical of Lionsgate's attempt to buy MGM, citing declining DVD sales as a reason to get out of the film library business. I'm also curious about the details of Lionsgate's deals. Does the company drive as hard of a bargain as other studios? For example, the studio co-produces and distributes Tyler Perry's movies, but he retains full copyright ownership of his product. Maybe that's what it took to make the deal, but I bet Lionsgate wishes it had just a little more of Perry's purported $400 million movie fortune, which makes him one of the wealthiest people in Hollywood, out of proportion, I would argue, to the overall box office he has created. Then there was all the drama last year with Lionsgate actually driving a hard bargain with "Mad Men" creator Mathew Weiner. Rather ominous rumors circulated about the creator's potential departure before it was reported that Weiner would be returning for another season. Was the talent or the studio making an unusual demand? Was Lionsgate trying to drive a hard deal since it had given too much to talent in the past? Neither of these instances is necessarily a red flag, but maybe they offer hints into what Icahn has sniffed out.

Whatever the outcome, this fight over Lionsgate is turning out to have all the drama of the characters in Wall Street or Pretty Woman (the hostile takeover part). Quick, someone grab the film rights!