Declaring that “if Blockbuster was a movie, it would be an expensive flop,” shareholder advisory service Glass Lewis has recommended that Blockbuster shareholders oust CEO John Antioco.
Antioco is locked in a proxy battle with corporate raider Carl Icahn for control of the Blockbuster board of directors. Shareholders will vote at a meeting Wednesday on three directors, including Antioco, who is up for re-election. Icahn is fielding his own dissident slate, which includes himself and two others — Edward Bleier, a longtime Warner Bros. marketing exec, and Strauss Zelnick, former prexy- chief exec of BMG Entertainment.
“The company has made a series of strategic missteps,” Glass Lewis CEO Greg Taxin told Daily Variety, adding that Antioco’s promises to refocus the company are “a dollar short and a day late.”
The Glass Lewis report to its institutional clients faults Blockbuster management for walking away from its bid for Hollywood Entertainment and ignoring for many years the threat from online video rental companies such as Netflix. It notes that Blockbuster has lower profit margins than competitors Movie Gallery and Hollywood Entertainment and lost $1.2 billion in 2004. The report also complains about Antioco’s salary, which it pegged at more than $34 million last year.
However, Glass Lewis also questions Icahn’s commitment to Blockbuster and whether his proposals will actually result in a long-term benefit to the company.
Therefore, the advisory company does not recommend a vote for Icahn either. It recommends that shareholders vote for Bleier and Zelnick, who both have strong credentials in the entertainment business and whose presence would “challenge management to perform better.” It also recommends management candidate Peter Bassi, who has been on the board just since March.
Last week, the other big shareholder advisory service, Institutional Shareholder Services, issued a similar recommendation — Bleier and Zelnick but not Icahn. It recommended no vote on the management candidates.