Blockbuster CEO, Icahn Hurl Barbs During Call
John Antioco could have used a pause button Thursday.
The chief executive of beleaguered video rental giant Blockbuster Inc. found himself in a nasty telephone debate with dissident shareholder Carl Icahn during what otherwise was a conventional earnings conference call with analysts to discuss the company’s $57.5-million first-quarter loss.
With sparks worthy of a Cinco de Mayo fireworks show, veteran corporate raider Icahn hurled barbs at Antioco, accusing the CEO of misrepresenting Icahn’s criticisms of the company leading up to Blockbuster’s annual meeting next week.
“You’ve mischaracterized what I’m trying to achieve here,” Icahn said.
At the meeting, Icahn hopes to get himself and two other dissident representatives elected to the Dallas-based company’s board. Antioco, who is up for reelection as a director, has threatened to leave the company if he loses the election.
On the conference call, Icahn and Antioco sparred over the size of the CEO’s bonus, with Antioco accusing Icahn of misrepresenting it as a $50-million payout. In a later interview, Antioco said he was aware Icahn would be on the call.
Icahn grilled Antioco on whether he would continue to take a bonus, and whether Blockbuster would put its entire board of directors up for reelection next year, if the CEO’s initiatives failed. Antioco said it was not up to him to relinquish his bonuses or to call for a new board.
Tempers quickly grew heated. After Icahn interrupted him, Antioco said: “Don’t step on me and I won’t step on you.”
Eventually, an operator cut Icahn off, saying, “Excuse me, this is not the proper forum for that dialogue.”
Icahn, Blockbuster’s largest shareholder, has spearheaded a campaign against Antioco’s attempts to reverse the erosion of the company’s once-thriving video rental business, suggesting that the company should be sold.
Blockbuster has lost business to mass merchandisers such as Wal-Mart Stores Inc. and Best Buy Inc. and online rental firms such as Netflix Inc.
Antioco used the conference call to defend his strategies, warning investors that electing Icahn’s candidates could put the company’s board at cross-purposes. Icahn’s slate includes Strauss Zelnick, a former top 20th Century Fox and BMG executive, and former Warner Bros. executive Edward Bleier.
Considering that the in-store movie rental business has declined for three consecutive years, Antioco said he had no choice but to try to revamp the company by implementing online services, getting rid of late fees and expanding Blockbuster’s reliance on buying and trading of movies and games.
“This means if we were to sit back and do nothing ... we estimated our operating income would decline by $180 million per year,” he said. Given that, Antioco said, Blockbuster would “have nowhere to go but out of business.”
Antioco noted that the company’s former owner, Viacom Inc., realized that Blockbuster could not be run just to generate cash, and that his strategy to build Blockbuster as a brand would offer shareholders their best return on investment.
Blockbuster’s quarterly loss came to 31 cents a share, contrasted with a profit of $114.4 million, or 63 cents, a year earlier. Results included $7.7 million in costs stemming from its failed bid to acquire Hollywood Entertainment Corp. Revenue rose 3% to $1.55 billion.