Carl Icahn unloads on Lions Gate management

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Carl Icahn, Wall Street’s most feared corporate raider, has taken off the gloves.

Breaking his silence for the first time about his displeasure with the management of Lions Gate Entertainment -- led by Chief Executive Jon Feltheimer and Vice Chairman Michael Burns -- Icahn got on the phone to blast its recent $250-million acquisition of TV Guide Network and TVGuide.com, saying it ‘borders on recklessness,’ and branded the company for what he described as ‘excessive’ overhead.

On Wednesday, Icahn broke off talks with Lions Gate about gaining seats on its 12-member board.

‘I was surprised that the deal broke down after agreeing not to tender an offer for the common stock and not to do a proxy fight,’ Icahn said in a phone interview late today. ‘It broke down because they refused to make the same standstill agreement applicable to any large shareholder they might give board representation to in the future.’

He added, ‘After spending all that time negotiating, I think it was shortsighted on their part.’

Obviously referring to Lions Gate’s acquisition of TV Guide, Icahn said, ‘I believe this borders on recklessness for a company to spend $250 million of cash on an acquisition funded by a short-term revolver that is quite fragile in that the revolver comes due if any shareholder buys more than 20% of the common stock.’

Icahn currently owns about 14.5% of the stock and his former investment chief, Mark Rachesky, owns just under 20%. Today, Icahn offered to buy up all of Lions Gate’s public debt for as much as $325 million, tightening the rope around the company.

Regarding Lions Gate’s overhead, Icahn said, ‘I believe it is excessive to spend $125 million on SG & A [selling, general and administrative] for a company of this size.’ Lions Gate had revenue of $1.36 billion during its last fiscal year.

Asked if his grand game plan was to force a sale of the movie and TV studio, he said, ‘In this economic environment, I’m not advocating a sale of the company.’

A Lions Gate spokesman was not immediately available for comment.

-- Claudia Eller