Video chain Blockbuster Inc must replace its chief executive by the end of the year in order to please billionaire investor Carl Icahn and emerge from bankruptcy.

The movie rental company already has identified a "candidate from a major studio," according to a court filing on Tuesday. It said it could also name an internal candidate to fill the role.

Blockbuster is seeking approval from the U.S. Bankruptcy Court in Manhattan to hire executive search firm Korn/Ferry International to identify CEO candidates. The new chief would replace James Keyes, who has been CEO since July 2007.

The company filed for bankruptcy last month, battered by online and mail-order services that have changed the media habits of its customers. Its restructuring plan gives Icahn and three hedge funds that hold the company's debt a controlling stake.

Blockbuster agreed to have a chief executive in place by year end, according to court documents. It is searching for a candidate who is acceptable to 75% of the debt holders who backed the company's restructuring agreement.

In addition to Icahn, that group includes Owl Creek Asset Management LP, Monarch Alternative Capital LP, Varde Partners Inc and Stonehill Capital Management LLC.

Icahn is currently battling for control over the Lion's Gate Entertainment Corp (NYSE:LGF) film studio. He has also thrown his support behind a Lion's Gate proposal to merge the studio with Metro-Goldwyn-Mayer, a rival that is preparing to file for bankruptcy.

Blockbuster did not immediately return a call for comment.

Keyes joined Blockbuster after serving as president and chief executive of 7-Eleven Inc.

The case is In re: 10-14997, U.S. Bankruptcy Court, Southern District of New York.