As promised, yesterday's annual shareholder meeting at Blockbuster (NYSE:BBI) was full of fireworks. Billionaire corporate raider Carl Icahn put himself on the ballot along with two entertainment-industry veterans in an effort to oust CEO John Antioco and two other incumbents from the board. Icahn and his buddies won in what amounts to a landslide for the watchdogs -- and a huge no-confidence vote for Antioco.
While Blockbuster shares inched slightly higher on the news, Netflix (NASDAQ:NFLX) saw its stock soar by 12%. Why? Well, given Icahn's public criticism of Antioco for spending too much time and money on the mail-delivered rental market instead of focusing on the bricks-and-mortar stores, some are speculating that Blockbuster may soon bow out of Netflix's niche.
Don't bet on it. There is too much at stake here, and if online rentals become a two-horse race, Blockbuster is better off remaining competitive instead of giving Amazon.com (NASDAQ:AMZN) the window of opportunity it needs to enter this growing market. Still, the presence of Icahn, despite his constituting a minority on the board, may result in having Blockbuster ease up on the pricing war. That would be welcome news to Blockbuster and Netflix shareholders alike.
Ever since Icahn took a significant position, Antioco's performance has come under fire. It wasn't all Antioco's fault, as Viacom (NYSE:VIA) left Blockbuster out to dry by forcing the debt-heavy company to pay out a beefy dividend ransom to win its emancipation. Yet Antioco stands to collect a $54 million severance payment if he bolts -- a real possibility at this point -- and that only highlights why change was so necessary at Blockbuster. Any board that would grant a hefty golden parachute to someone who has dealt the company heavy financial losses deserved to be shaken and stirred.
Blockbuster has been trying the patience of its shareholders lately with its awkwardly marketed "No Late Fees" campaign and its failed bid to wrestle away Hollywood Entertainment (NASDAQ:HLYW) from rival bidder Movie Gallery (NASDAQ:MOVI), and a vocal majority are crying for change. While Icahn's past would lead one to believe that he prefers immediate results -- nipping away at many of Antioco's growth initiatives -- the market seems to welcome change when it comes to troubled companies.
Antioco may have overstayed his welcome, but thanks to that meaty severance package, the "No Late Fees" policy clearly does not apply to him.
Some recently rented headlines:
- They sure are brawling at Blockbuster these days.
- Carl Icahn has been a successful corporate raider for decades.
- Blockbuster has to find a way to make its online and offline worlds jell.
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Longtime Fool contributor Rick Munarriz can't remember the last time 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.
