Things are heating up at Blockbuster (NYSE:BBI) as the company heads into next week's annual shareholder meeting. With corporate raider Carl Icahn taking a significant position in the company and proposing board replacements, the video rental giant is heading into a battle that may be worthy of a summer theatrical blockbuster.

Icahn has never shied away from taking a stand -- and then profiting from that stand. As Tom Taulli wrote back in February, when the renegade investor had his sights set elsewhere, "Icahn is a billionaire for a very good reason: He has a tremendous ability to find undervalued stocks -- and to agitate companies to realize the value gap."

His bid to name himself onto the Blockbuster board of directors -- along with two entertainment-industry veterans as allies -- was vindicated in part when Institutional Shareholder Services threw its support behind two of Icahn's board candidates. Yet in supporting Strauss Zelnick and Edward Bleier, ISS did not endorse Icahn himself.

Last night, the Blockbuster Franchise Association announced that it was backing the incumbents. This was never a given. Between Blockbuster's questionably awkward "No Late Fees" campaign and its aggressive online efforts that may ultimately cannibalize sales at the store level, the franchises had good reason to turn their back on the current leadership. But they did not.

Still, that doesn't mean that Icahn's leaf-rustling won't bear fruit. Some believe that Blockbuster concededHollywood Entertainment (NASDAQ:HLYW) to rival bidder Movie Gallery (NASDAQ:MOVI) way too soon. I don't. I think Blockbuster had enough on its plate without having to worry about bringing on another troubled rental chain. Still, the perception is out there.

We also have the online price war with Netflix (NASDAQ:NFLX) and Wal-Mart's (NYSE:WMT) Those battles have Blockbuster doing some pretty peculiar things, like offering a $14.99 monthly plan that allows movie fans to rent as many as three DVDs at a time by mail, or just one disc at a time at the store level. If that doesn't shine a floodlight on the value proposition of going online instead of heading out to the local store, nothing will.

Over the next few days, the battle should intensify. No, Icahn is not a saint, but he has an uncanny knack for spotting bargains and stirring the pot until fair value is realized. Given Blockbuster's deteriorating financials and the sector's quickly changing landscape, it's hard to value the company based on its future prospects. With or without Icahn -- and with or without CEO John Antioco at the helm -- this is no easy fix. It's why the franchise owners prefer the stability of Antioco. Yet shareholders may have something else in mind.

Rustle, leaves, rustle.

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Longtime Fool contributor Rick Munarriz can't remember the last time that he stepped into a Blockbuster store. He owns shares in Netflix. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.