The Scoop
Activist investor Anson Funds is pushing movie studio Lionsgate to redefine itself for “the AI era” or put itself up for sale.
“The rise of generative AI has led the market to sort companies bluntly into ‘AI winners’ and ‘AI losers,’” Anson’s Sagar Gupta wrote in a July letter to Lionsgate’s board reviewed by Semafor. “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 underscored that it believes Lionsgate could actually enjoy a premium as the owner of thousands of films, given the IP licensing that could come from that library, but that it had struggled to define that to investors.
Lionsgate, home to Rambo, The Hunger Games, and John Wick, has been fielding informal interest for some time, Semafor reported earlier this year, as activists eye the potential takeover target. With a rich library of 20,000 titles at a time when streaming platforms are desperate for good content, the company has signaled to investors that it has been willing to consider all options.
The company declined to comment for this article but told investors on its earnings call last week that it hasn’t “engaged in any substantive conversations” with potential acquirers.
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Anson Funds took a position in Lionsgate last year, and has been meeting with management to push it to either sell or strengthen its AI hand and messaging as shares continue to dive on competition from AI labs’ video tools, according to people familiar with the matter.
Shares in the company are up 36% so far this year, but have dropped 7% in the last month as questions increase about the future of Lionsgate’s business model.
“Amazon’s acquisition of MGM, Microsoft’s acquisition of Activision Blizzard, and the recent, hard-fought contest between Netflix and Ellison-backed Paramount Skydance for Warner Bros. Discovery all demonstrate that technology and streaming players are already willing to acquire premium IP rather than simply license it,” Gupta wrote in his July letter.
Lionsgate has been receiving informal advice from at least two investment banks, but has not yet hired either of those banks to run a formal strategic review, according to a person familiar with the discussions.
While any number of suitors, including big tech companies, could participate in a Lionsgate sale process, one big fish has already said it would sit it out: Netflix, which in response to a Semafor report earlier this year denied it was pursuing the studio.