An activist investor’s perspective on Lionsgate and AI
An activist investor, Anson Funds, argues that the market has labeled Lionsgate as an AI casualty, urging the studio to adapt or sell. According to a July letter to the board (reviewed by Semafor), Sagar Gupta from Anson highlights the impact of generative AI on the entertainment industry.
The investor’s argument
Gupta notes that the rise of AI models like Sora and Seedance has led to a binary view of companies: "AI winners" or "AI losers." He cites Lionsgate’s stock reaction to these releases, claiming it indicates the market believes the studio is at risk due to AI.
“The market’s default assumption… is that a studio is more likely to be an AI casualty than an AI beneficiary.”
Anson’s counter-argument
Anson disagrees, suggesting Lionsgate could attract a premium because of its extensive library of approximately 20,000 titles. They believe the company has not effectively communicated this value to investors, treating it as a marketing issue rather than a business model problem.
Supporting evidence
Gupta points to Disney’s deal with OpenAI’s Sora and acquisitions like Amazon’s purchase of MGM, Microsoft’s acquisition of Activision Blizzard, and Netflix’s pursuit of Warner Bros Discovery as evidence that tech and streaming players are willing to acquire premium IP outright.
Lionsgate’s response
Lionsgate has remained quiet, declining Semafor’s comment request and stating on its earnings call that it hasn’t engaged in substantial conversations with potential acquirers. While shares have risen 36% this year, they’ve fallen 7% over the last month, reflecting market uncertainty.
The uncertain future of AI in film
The article concludes by noting that while AI’s impact on film production is undeniable, its role in displacing or enhancing studio output remains undetermined. Consumer appetite and the integration of AI tools into existing production processes are still evolving.