The game isn't over yet for Circuit City Stores' Richmond management. Recent news developments suggest that there is still hope for the company to survive as an independent company: All it takes is for Blockbuster Inc. and takeover artist Carl Icahn to lose interest in acquiring it. How might that happen?

Blockbuster CEO Jim Keyes reiterated yesterday that the movie-rental company will not proceed with a proposed purchase of electronics retailer Circuit City Stores "unless the situation makes sense both strategically and financially and also returns significant value for our shareholders." Although he hopes that a rummage through Circuit City's books will confirm the benefits of combining the two companies, Keyes indicated during a conference call to discuss first-quarter results yesterday, he won't know for sure until the due diligence is complete.

Blockbuster initiated a $1 billion-plus takeover bid for the much-bigger Circuit City two months ago. Circuit City initially declined to open its books, expressing doubts about Blockbuster's ability to finance a deal, but relented last week after top Blockbuster shareholder Icahn said he'd be willing to purchase Circuit City himself if Blockbuster were unable to. Read more.

Meanwhile, Icahn has gotten embroiled in a proxy fight at Yahoo!, whose board recently rejected a takeover bid by Microsoft. Icahn, who owns nearly 4 percent of Yahoo!'s Stock, is seeking to oust the company's entire board. Read more.

So, the big question is, can Icahn pursue two big shareholder battles simultaneously and, if not, which one would he be more invested in: Yahoo! or Circuit City? Let's see now... If Icahn owns 4 percent of Yahoo!, which has a market capitalization of $38 billion, that makes Icahn's stake worth more than $1.1 billion. By comparison, he paid $6.2 million last November for a stake in Blockbuster, which is worth less today than it was then, and he's sniffing around Circuit City, which is capitalized at $840 million -- giving it about 1/40th the market value of Yahoo! I'm guessing that Icahn, if faced with a choice, is more likely to mix it up with the big boys at Yahoo! and Microsoft than piddle around with the likes of Blockbuster and Circuit City.

So, here's the survival scenario for Circuit City's home boys: Blockbuster pokes around its books and decides either that combining the two companies isn't such a great idea after all, or that it lacks the financial resources to pull off the deal. Then Icahn gets all tied up with the Yahoo! battle and forgets about the chump change he has invested in Blockbuster. Circuit City lives to fight another day and CEO Philip Schoonover's turnover plan miraculously revives the company's profitability before the creditors move in!