Blockbuster CEO details his exit strategy
NEW YORK — Clarifying his position Thursday in the face of a proxy challenge by Carl Icahn, Blockbuster chair-CEO John Antioco said he’d leave the company if not re-elected to the board at the annual shareholders’ meeting next week in Dallas. If re-elected along with one or two dissident candidates, Antioco will remain on the board but isn’t sure if he’ll stay on as CEO.
Feisty financier Icahn emerged as Blockbuster’s single largest shareholder while the video giant was engaged in a losing bid for smaller rival Hollywood Entertainment.
Icahn has accused management of botching that deal and questioned other strategic moves. Now, he’s putting himself up for a board seat along with longtime Warner Bros. exec Ed Bleier and former BMG Entertainment head Strauss Zelnick, now head of Gotham’s Zelnick Media. Such proxy challenges, with an alternate slate of directors on the ballot, are extremely rare.
Antioco and Icahn traded barbs when the financier called in Thursday during Blockbuster’s quarterly conference call to discuss financial results.
Company swung to a $57.5 million loss during the first quarter vs. a $114 million profit the year before. It cited higher costs, including the expensive takeover battle for Hollywood.
Revenue rose 3% to $1.55 billion, squeezed by a new policy eliminating most late fees.
A testy exchange during the call ended with Icahn being cut off in mid-sentence.
“Do you honestly believe that electing a divisive element will help move this company and your investment forward?” Antioco asked. “Remember that for all his talk about helping Blockbuster, Mr. Icahn doesn’t know our business.”
Antioco defended the decisions to forgo late-fee revenue and invest in an online-rental service. The steps were needed to compete against more established online rival Netflix and against cheap DVDs sold at discount stores, he said.
Icahn asked Antioco if he would let all seven company directors stand for election next year — a move that would make it easier to overthrow the board. “We want you accountable next year if your initiatives fail as they have in the past,” Icahn said.
Icahn also asked Antioco to forgo all bonuses, calling the exec’s latest pay package “egregious.”
Antioco said he had no control over board rules or bonuses. When Icahn persisted, he was cut off in mid-sentence and dropped from the call.
Proxy adviser Institutional Shareholder Services recommended earlier this week that stockholders elect Bleier and Zelnick but withhold their votes for Icahn and keep Antioco instead.