NEW: Carl Icahn Affiliates confirmed control over 10.56% of the common shares of Lionsgate Entertainment today after the market closed. The acquired Shares were purchased on the New York Stock Exchange at a price of $4.53 per common share. Icahn Affiliates now own and control 12,235,723 common shares of Lionsgate Gate and said it bought them because they were “undervalued”. In other words, Icahn is buying the company on the cheap.
Lionsgate just filed their 3rd-quarter report and “it’s a fucking disaster,” one of my sources sums up. “The business plan is definitely broken.” The result is that the stock is down almost 30% today, to a 6-year low, trading at a level prior to its purchase of Artisan. Worse, a conference call with analysts this morning sounded like a funeral dirge. Above and beyond taking losses on Transporter 3, Punisher, and The Spirit, the mini-major took a big loss on their HIT Entertainment North American DVD distribution deal. And it looks like their purchase of Joe Drake’s Mandate Pictures is not working out as well as they hoped. No wonder Lionsgate posted a quarterly net loss as poorly performing films and DVD returns made it miss Wall Street expectations by a huge margin. And the company said the weak third quarter results “will have a significant negative impact” for the whole year. I can’t help but think that any moment now Carl Icahn — the Wall Street investor who loves to destabilize management when a stock is underperforming and who holds a 9% stake in Lionsgate — will demand that top execs be fired. Though Jon Feltheimer is trying to buy more time by promising a smaller film slate, lower associated marketing costs, stronger performances at its TV, home entertainment, international and library businesses in 2010.
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