Admitteldy I was down in the dumps last week. My two favorite punching bags (MCI and VOOM/Cablevision), had moved through a lot of their nonsense and I was without a favorite target.
But just then, the phone rang and a buddy of mine told me about the clown show that took place during Blockbuster's Q1 call. Had I heard about it? No I said but I would definitely check it out. Boy am I glad I did.
Blockbuster's Q1 call was one for the ages. The company, reeling through several major changes lately (ending of "late fees", losing the battle for Hollywood Video to rival MovieGallery and launching an online rental service a la Netflix) shared their Q1 earnings to the world. The news was not a blockbuster.
But that wasn't what made it great. The great part was Blockbuster's largest shareholder Carl Icahn calling in to rip current CEO John Antiocco about Antiocco's past and future decisions.
Icahn is launching a proxy fight to replace 3 board members (and he would love to shove Antiocco out the door). He has not said it publicly but past history suggests that Carl wants either an LBO or a huge dividend to take place so he can maximize his return on investment. Carl has made his living with this type of "investing" and if you think I'm nuts ask the folks in Saint Louis who used to work for Carl when he "rescued" TWA in the early 90's.
After reading off the company numbers, Antiocco went through a 15 minute spiel that basically ripped Icahn and his "ideas" for the company. Upon completion, the call-in portion of the program took place. After three softball questions, Icahn was up (FYI...kudos to Antiocco for letting the operator take Icahn's call, although I bet he wishes he hadn't).
Icahn had two basic questions: Would Antiocco forego any bonus pay this year if the company did not hit their targets and would he also put the whole board up for reelection if, again, the company failed to make their numbers?
Antiocco promptly put on his top hat, grabbed his cane and cued the music. It was time to start dancing. His tap routine was pretty good as he did not answer any of Icahn's questions (both fair in my book).
Icahn then told Antiocco he was, essentially, lying when Antiocco said there was no credible LBO offer for Blockbuster. Icahn started to say he personally heard of more than one offer but...
But he didn't get to finish, because they hung up on him. Yes, mid-sentence, Blockbuster hung up on its largest shareholder. That's the equivalent of shoving your best customer out the door because it's five minutes past closing. Bad idea and Carl has a long memory. By the way if you have not heard the call, go to blockbuster's website and check it out. Carl comes in 45 minutes into the conversation.
Hawk's View: Next week will be a fun one as the proxy vote to replace three board members takes place. Look for Icahn's guys to lose, but also don't be surprised if Blockbuster tries to pull a Verizon and buy out Icahn just to get him out of their hair. Antiocco and company can't afford to spend the next year fighting Icahn every step of the way. "Uncle" Carl won't quit until he gets what he wants (the board and Antiocco replaced). If Blockbuster wants to continue down its path, it needs total focus. While it does need money from guys like Carl Icahn to finance its dreams, it does not need Carl Icahn.
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