Just two days after Carl Icahn took a 9.2% stake in Lionsgate, Portfolio claims that Icahn’s ultimate end game is to create some sort of linkup between Lionsgate and Yahoo. Is it possible that Carl’s getting a bit too obsessed with Yahoo?
Nonetheless, media analyst Richard Dorfman suggests that Icahn may want Yahoo to acquire Lionsgate’s valuable film library and transform itself into an online movie distributor. The idea seems totally out of left field to us, but it could increase Yahoo’s value and help Icahn recoup his massive investment during his lobbying for a Microsoft deal earlier this year.
Portfolio’s Hollywood Deal Blog: Richard Dorfman, a managing director with Richard Alan, a New York-based financial advisory and investment firm focused on the media industry, has an eye on the company’s vast library of movies.
That’s the one with over 6,000 flicks ranging from Dirty Dancing to the Rambo movies–and the one Icahn is probably eyeing, according to a Dorfman analysis.
The library already makes about $200 million a year for the company, and could be leveraged further, including through DVD sales and third-party licensing fees–to make Lions Gate’s true value closer to $15 or $16 a share, according to Dorfman. That’s more than twice the $7.20 shares closed at Wednesday.
But the Lions Gate library could end up being more of a problem in the current climate, because it could make the company a valuable target for an acquisition by, say, Yahoo. That’s an idea Dorfman believes has already occurred to Icahn.
“If Yahoo buys a traditional media company like Lions Gate, all of a sudden that takes it to a whole new level,” he says. “It basically would turn it into a movie distribution company”—and one well-positioned with an immensely valuable store of proprietary content, for which Yahoo conceivably could develop a profitable online distribution system.
Selling to Yahoo, we’re guessing, would not be Feltheimer’s first choice. But Icahn has a vested interest in increasing Yahoo’s value, to recoup the investment he made in the company while lobbying for a deal with Microsoft.
As he ratchets up his involvement in Lions Gate, it’s a distinct possibility that he’ll use it as a chess piece in a larger game to bump up Yahoo’s value…
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