Lionsgate Pressured to Sell as Activist Investor Warns of AI Threat to Film Library Value

Lionsgate pushed to sell as market prices it as an AI loser

Activist investor Anson Funds is pressing Lionsgate to redefine itself for the AI era or put itself up for sale, according to a July letter to the board reviewed by Semafor. The argument turns on how the market reads a film library. "The rise of generative AI has led the market to sort companies bluntly into 'AI winners' and 'AI losers'," wrote Anson's Sagar Gupta. Lionsgate stock, he argued, has reacted sharply and negatively to new AI video model releases. The specific tell Gupta named Sora and Seedance as the releases that moved the stock. That is a precise claim about how equity markets now price content ownership. Both models have advanced quickly. ByteDance's Seedance 2.5 generates 30-second native 4K video and accepts up to 50 reference inputs, a capability that did not exist in usable form eighteen months ago. The market's default assumption, in Gupta's reading, is that a studio is more likely to be an AI casualty than an AI beneficiary. The counter-argument Anson does not accept that reading. It believes Lionsgate could command a premium precisely because it owns roughly 20,000 titles, with licensing revenue available from that library. The company has simply failed to explain this to investors. That is a marketing problem rather than a business-model problem, at least in Anson's telling. The thesis has a live proof point. Disney licensed more than 200 characters to OpenAI's Sora alongside a $1 billion investment, establishing that studio IP has a price in generative video rather than merely a vulnerability. Why buyers might come Gupta pointed the board at recent precedent. Amazon bought MGM, Microsoft bought Activision Blizzard, and Netflix fought Ellison-backed Paramount Skydance for Warner Bros Discovery. His conclusion is that technology and streaming players have already shown they will acquire premium IP outright rather than license it. If that holds, a 20,000-title catalogue is an acquisition target rather than a depreciating asset. Lionsgate owns Rambo, The Hunger Games, and John Wick, which is the kind of franchise inventory streaming services are short of. What the company says Lionsgate declined to comment to Semafor and told investors on its earnings call last week that it has not engaged in any substantive conversations with potential acquirers. It has taken informal advice from at least two investment banks without hiring either to run a formal strategic review. Netflix, one obvious suitor, has publicly denied pursuing the studio. Shares are up 36% this year but down 7% over the past month, which is roughly the shape of a market that has not made up its mind. The bigger uncertainty Whether AI video displaces studio output or feeds off it remains genuinely unsettled. Text-to-video systems have already produced award-winning short work, and the trajectory towards longer forms is not in doubt. The tools are also being absorbed into existing production rather than replacing it. Startups like Flawless are editing Hollywood films line by line, which is augmentation rather than substitution. Consumer appetite is not settled either. OpenAI shut down Sora as a consumer product after objections including from the families of Martin Luther King Jr and Robin Williams, a reminder that generated content carries reputational costs licensed content does not. What is actually being tested The market is sorting companies into AI winners and losers on assumptions that have not been validated by revenue, and studios have landed on the wrong side of that sort by default. Anson's bet is that the sorting is wrong and a buyer will notice before the market does. The alternative reading is that the market is early rather than mistaken, which is a considerably worse position for anyone holding the stock.

Lionsgate Stock Slips After Report of Activist Investor Pushing Sale

Shares in Lionsgate had a roller coaster ride on Tuesday after a report that an activist investor had urged a pivot of the Hollywood studio towards artificial intelligence to avoid becoming an "Al casualty." Semafor was the first to report on the letter from Sagar Gupta, who leads the activism strategy at Anson Funds, that urged Lionsgate to transform itself for the AI era, or consider a for sale on its front door. "Lionsgate's stock has reacted sharply -- and negatively -- to the release of new AI video models, including Sora and Seedance, which we believe reflects a default market assumption that a studio is more likely to be an AI casualty than an AI beneficiary," Gupta argued in the private letter that The Hollywood Reporter understands was received by the studio's board of directors. Stock in Lionsgate closed on Tuesday closed down 49 cents, or around 4 percent, at $11.87, after experiencing wild swings in early morning trading on the New York Stock Exchange. Kathleen Grace, a former executive at YouTube and the rights-tracking AI company Vermillio, was hired earlier this year as the first chief AI officer at Lionsgate, and company CEO Jon Feltheimer on recent analyst calls has made much of advances by the studio in integrating AI tools to navigate disruptive filmmaking technologies. Feltheimer and top Lionsgate executives at the studios have aimed to support filmmakers, find new efficiencies in its production, marketing, distribution and administrative operations, and work to protect studio IP and its talent partners. Michael Burns, Lionsgate vice chairman, on an August 6 call with analysts pointed to AI as "a real opportunity for us, both to grow our revenue and to lower costs in content production, and across all our day-to-day operations. It's essential we deploy these tools responsibly, efficiently and in partnership with the creative talent leading our projects. But we're really excited about this tool." Feltheimer on the same analyst call reiterated the studio was working with creative talent and across the company's workforce while using AI tools. "There are just some tremendous use cases right now that we're playing with, and you know, a year from now it's going to be a whole different world there. But I can tell you, it's saving us money. It's making us more efficient across the board," he argued. Burns also discussed possible mergers and acquisition activity amid industry consolidation. "In spite of what the headline suggests, we haven't engaged in any substantive conversations. What I will say is this gives us strength and the breadth of our IP and our franchises, and we remain one of the most compelling assets in a rapidly consolidating marketplace," he added as Lionsgate as a standalone studio after having separated from Starz now has "strategic optionality" for possible dealmaking.

Lionsgate Studios stock rises on activist sale pressure By Investing.com

Investing.com -- Lionsgate Studios (NYSE:LION) shares rose 3.5% Tuesday after Semafor reported that activist investor Anson Funds is pushing the movie studio to redefine itself for the AI era or put itself up for sale. In a July letter to Lionsgate's board reviewed by Semafor, Anson's Sagar Gupta commented, "The rise of generative AI has led the market to sort companies bluntly into 'AI winners' and 'AI losers.' Lionsgate's stock has reacted sharply -- and negatively -- to the release of new AI video models, including Sora and Seedance, which we believe reflects a default market assumption that a studio is more likely to be an AI casualty than an AI beneficiary." Anson stated it believes Lionsgate could command a premium as the owner of thousands of films, given the intellectual property licensing potential from that library, though the company has struggled to communicate that value to investors. Lionsgate, home to franchises including Rambo, The Hunger Games, and John Wick, has been fielding informal acquisition interest for some time, according to Semafor's earlier reporting. This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.