lionsgate_logoThat napalm smell surrounding Hollywood is even more pungent this afternoon. I’ve just confirmed that Lionsgate management’s attempt to lowball MGM didn’t work. The studio has now dropped out of the auction after bidding between $1.3 billion and $1.4 billion. (For the record, the Wall Street Journal got to this first.) But what’s most interesting to me is that Lionsgate defied Carl Icahn’s warning not to do any major deals and did bid for MGM after all. (Yesterday, LG vice chairman Michael Burns wouldn’t admit to a bid when interviewed by CNBC.) This is entertaining indeed — until somebody gets hurt. And, inevitably, that’ll be the Lionsgate staff. Management needs to settle with Icahn, and quick.