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The first time I've seen a well written critique of activist investors like Carl Icahn. He certainly scuttled any chance that Blockbuster had of succeeding. He'

by xrd 4y ago

The first time I've seen a well written critique of activist investors like Carl Icahn. He certainly scuttled any chance that Blockbuster had of succeeding. He's often right about small details when it comes to traditional companies and where to cut costs (as are many activist investors), but this story reads like he sabotaged Blockbuster when it had an actual substantial and viable chance to compete. I had not heard this story before, I always assumed Blockbuster was just too dumb to compete, but it wasn't the case at all. And, interesting if people like Hastings knew the forces at play in his competitors, and as Strategery points out, can play the long game when they know their competitors can't. Terrific article, as usual.

jessaustin 4y ago
FTFA: Netflix would go on to offer to buy Blockbuster Online; Antioco turned the company down, assuming he could get a better price once Netflix’s growth turned upside down. Carl Icahn, though, who owned a major chunk of Blockbuster and had long feuded with Antioco, finally convinced him to resign that very same quarter; Antioco’s replacement took money away from Total Access and funneled it back to the stores, and Netflix escaped (Hastings would later tell Shane Evangelist, the head of Blockbuster Online, that Blockbuster had Netflix in checkmate). Blockbuster went bankrupt two years later. OK, it was probably a mistake to cut back on "Total Access", but that takes on a deckchair character considering the whole firm was bankrupt in two years! That isn't a convincing support for previous management. ISTM the best decision for shareholders would have been to take the Netflix deal?
f38zf5vdt 4y ago
"Activist investors" engage in what will be considered a crime in the near future, which is purchasing shares to obtain board ownership -> take in obscene amounts of debt for stock buybacks -> dump shares and let the company fall into bankruptcy. I prefer their original name "corporate raiders".
- kshacker 4y ago
  How is this allowed? If companies by same activist investors regularly go into bankruptcy, the creditors must be able to point that out and get some restrictions placed in their favor, no?
wefarrell 4y ago
Blockbuster had plans to deliver streaming content in 1999. They partnered with an innovative energy company that wanted to get into the broadband business: https://www.inc.com/quora/how-early-streaming-video-led-to-unraveling-of-enron-scandal.html https://www.inc.com/quora/how-early-streaming-video-led-to-u... I wonder what ever happened to them.
- anonymoose33282 4y ago
  Now that is a name I never would've expected to see next to Blockbuster's. I also had no idea that Blockbuster was that close to launching a streaming service; like a lot of other people, I guess I always assumed they just were overconfident and thus too slow to catch up.

by xrd 4y ago

jessaustin 4y ago

FTFA: Netflix would go on to offer to buy Blockbuster Online; Antioco turned the company down, assuming he could get a better price once Netflix’s growth turned upside down. Carl Icahn, though, who owned a major chunk of Blockbuster and had long feuded with Antioco, finally convinced him to resign that very same quarter; Antioco’s replacement took money away from Total Access and funneled it back to the stores, and Netflix escaped (Hastings would later tell Shane Evangelist, the head of Blockbuster Online, that Blockbuster had Netflix in checkmate). Blockbuster went bankrupt two years later. OK, it was probably a mistake to cut back on "Total Access", but that takes on a deckchair character considering the whole firm was bankrupt in two years! That isn't a convincing support for previous management. ISTM the best decision for shareholders would have been to take the Netflix deal?

f38zf5vdt 4y ago

"Activist investors" engage in what will be considered a crime in the near future, which is purchasing shares to obtain board ownership -> take in obscene amounts of debt for stock buybacks -> dump shares and let the company fall into bankruptcy. I prefer their original name "corporate raiders".

kshacker 4y ago
How is this allowed? If companies by same activist investors regularly go into bankruptcy, the creditors must be able to point that out and get some restrictions placed in their favor, no?

wefarrell 4y ago

Blockbuster had plans to deliver streaming content in 1999. They partnered with an innovative energy company that wanted to get into the broadband business: https://www.inc.com/quora/how-early-streaming-video-led-to-unraveling-of-enron-scandal.html https://www.inc.com/quora/how-early-streaming-video-led-to-u... I wonder what ever happened to them.

anonymoose33282 4y ago
Now that is a name I never would've expected to see next to Blockbuster's. I also had no idea that Blockbuster was that close to launching a streaming service; like a lot of other people, I guess I always assumed they just were overconfident and thus too slow to catch up.