With Icahn Back In Media Mix, TV Business Drama Heats Up

by Wayne Friedman, Nov 2, 2012, 11:16 AM

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Well, well, well... Look who's back, perhaps looking to make some media company executives squirm: none other than Carl Icahn.

The long-time "active" investor -- or formerly active company raider, according to some --- now owns 10% of the seemingly always-in-the-headlines Netflix. Buying his shares for around $60 each, Icahn believes there is higher value for the subscription video-on-demand provider with 25 million U.S. subscribers.

So do investors. On Thursday, midday trading witnessed a sharp 14% rise in Netflix's stock to near $80 a share. In comparison, Netflix had an eye-popping $300 price back in July 2011.

Right off the bat, Icahn told Bloomberg TV his strong opinions about what should happen with Netflix -- like a merger of some sort with the likes of Amazon Prime or parts of Microsoft, Verizon or others to "consolidate" this growing end of the digital video business.

Icahn’s last media foray was with upstart mini-studio Lions Gate Entertainment, in which the existing management prevailed. He got similar results with another movie studio, Metro-Goldwyn-Mayer.

Good news for Netflix: Icahn believes that with the advent of tablets and Internet-connected TV, Netflix has the right model for digital video in the future.

What is his real intent? Stockholders, stockholders, stockholders. The mere mention of Icahn attached to Netflix allowed the stock market to take on his usual trick -- higher value. Icahn is already in the driver's seat. Buying at $60 a share, he could sell today at $80 a share and make a tidy sum.

One thing for sure, as we have seen in the past: This is only the start of more media headlines for this highly visible part of the new video business.

Mind you, when it comes to traditional aggressive corporate investors/raiders such as Icahn, traditional big media companies have pretty been much been off limits as targets. Why? Because these companies tend to be overpriced, too bulky, and not future-entertainment ready.

In any event, pick your companies carefully.

 

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