Wilson Sonsini Goodrich & Rosati is advising longtime client Netflix, which adopted a poison pill this week to ward off a potential takeover bid by activist investor Carl Icahn, who recently bought almost 10 percent of the on-demand streaming media and movie rental company.
Netflix announced in a statement Monday that it had adopted a shareholder rights plan, commonly known as a poison pill, to flood the market with discounted Netflix shares if Icahn seeks to increase his stake beyond its current 9.98 percent without the approval of the company’s board of directors. (Netflix’s poison pill has some unusual terms, according to The New York Times‘s DealBook.)
In an SEC filing, Icahn called the takeover defense maneuver by Netflix an example of “poor governance,” having previously proclaimed that the company would make a good acquisition target by a larger entertainment suitor like Amazon, Apple, Google, or Microsoft.
Even before the brewing battle with Icahn, Netflix’s CEO Reed Hastings has had a rough go of it in recent months. Hastings, who stepped down from Microsoft’s board in October, had his yearly stock option allowance slashed by 50 percent last year after a poorly received plan to separate Netflix’s mail-order DVDs and online streaming businesses led to the loss of 800,000 subscribers.
An SEC filing by Netflix this week shows that Wilson Sonsini name partner and chairman Larry Sonsini is advising Netflix as it faces off against Icahn. The team from the firm also includes Wilson Sonsini corporate partners Bradley Finkelstein, Robert Sanchez, and Warren de Wied.
Netflix chief communications officer Jonathan Friedland told The Am Law Daily that Wilson Sonsini serves as standing corporate counsel to the Los Gatos, California–based company, which was founded in 1997. The firm has also represented Netflix in antitrust, false advertising, and privacy litigation with subscribers, including a case that settled for $9 million earlier this year, according to an 8-K filed by the company with the SEC in February.
SEC filings show that Wilson Sonsini also handled Netflix’s initial public offering back in 2002 that yielded $800,000 in legal fees and expenses. (Wilson Sonsini partners received an equity stake in the Netflix listing, according to sibling publication The Recorder.)
A spokeswoman for Wilson Sonsini did not respond to a request for comment about the firm’s ongoing work for Netflix.
Other firms that have remained active advising Netflix include Morrison & Foerster, which sibling publication The National Law Journal reported last month guided the company to a settlement in litigation with deaf subscribers, and Greenberg Traurig, which was added to the company’s roster of privacy protection lobbyists earlier this year, according to The NLJ.
U.S. Senate lobbying records show that Greenberg Traurig has received $120,000 for its work on behalf of Netflix through the first three-quarters of this year. In September, The NLJ reported that Patton Boggs had hired former Netflix in-house lobbyist Michael Drobac in Washington, D.C. The firm last handled lobbying work for Netflix in 2008, according to Senate records.
David Hyman, a former associate at MoFo who became Netflix’s general counsel in 2002, continues to serve as the company’s top in-house lawyer and corporate secretary. Neither Hyman nor senior corporate counsel Reginald Thompson, who joined the company in 2008 from Wilson Sonsini, responded to requests for comment about the Icahn matter.
SEC filings show that Keith Schaitkin, general counsel of Icahn’s New York–based holding company Icahn Enterprises, is leading the corporate raider’s fight for control of Netflix.
Last month Schaitkin and Icahn mounted an ultimately unsuccessful $3 billion takeover bid for specialty truck maker Oshkosh, according to our previous reports. Oshkosh criticized Icahn for seeking to stack its board with a “slate of friends,” which Bloomberg reports included Icahn Enterprises president Daniel Ninivaggi and director Jack Wasserman. As we’ve previously noted, Ninivaggi is a former partner at Winston & Strawn, while Wasserman was a senior partner at New York–based Wasserman, Schneider, Babb & Reed.
Schaitkin, who took over this year from Marc Weitzen as general counsel of Icahn Enterprises, did not respond to a request for comment on whether Icahn himself has also retained outside counsel in his quest for change at Netflix.