Carl Icahn has been a director all his investing life, but now he wants to be in the business of directing movies. (Bloomberg)
Carl Icahn has jumped aboard the bandwagon of Netflix CEO Reed Hastings.
The billionaire investor has acquired a 10 percent stake in the video streaming company, saying he sees “a significant strategic value” in its rights deals.
That value had escaped the view of investors, as Netflix’s shares had slumped 17.3 percent over the past year before Icahn’s move.
News that the famed shareholder agitator now owns a sizeable stake in Netflix sent shares of the Los Gatos, Calif., company up 13.9 percent, to $79.24.
“Netflix may hold significant strategic value for a variety of significantly larger companies,” Icahn said in a regulatory filing announcing the stake.
Icahn called the stock undervalued and said he may “seek to have discussions” with Netflix about his concerns.
The investor, in an interview with The Post, said he sees potential in the growing dominance of the Internet over television.
“With the smart TV everything will be digitized,” Icahn said. “Microsoft and Google, they’re going to be represented on the home page of your TV,” he said.
As such, Netflix would be an ideal target for big companies, like Microsoft, seeking to incorporate streaming video into their offerings, he said.
“I think there will be consolidation in this industry,” he said. “I think Netflix makes for a good acquisition candidate.”
Icahn’s interest in Netflix also comes amid growing chatter that Microsoft may be interested in the video provider.
Fueling those rumors is the announcement last month by Hastings, 52, that he plans to step down from the Microsoft board in November.
“[Icahn] is positioning himself nicely for an inevitable sale,” said one media mergers and acquisitions specialist.
And Icahn isn’t the only Netflix investor who would welcome a sale.
“If someone put Netflix into play, the mother of all bidding wars would erupt,” hedge-fund manager and Netflix investor Whitney Tilson, who holds a stake in the company, recently told an investor conference.
Netflix became a household name over the last decade, mailing DVDs around the country. But Hastings has been trying to break away from the DVD business as people turn toward watching television and movies online.
Recent efforts to separate the DVD business from the streaming side soured both customers and Wall Street.
Ironically, the rise of Netflix helped deflate Blockbuster, which was another Icahn investment.
At its peak in 2011, Netflix shares were trading at $295.
This year the stock has fallen as low as $52, presenting a huge buying opportunity for investors like Icahn, who has been buying the stock for around $58 a share.
Icahn said he called Hastings before announcing his 10-percent stake, but he hasn’t heard back yet.
He said he doesn’t know yet what he plans to say except that the stock is undervalued.