RESOLVING THE LEDGER
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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.
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