An activist investor pressed Lionsgate to either overhaul its business for the artificial intelligence age or explore a sale after the stock market reacted negatively to the release of new AI video generation tools. Sagar Gupta, who leads activism strategy at Anson Funds, argued in a private letter to Lionsgate's board that the studio risked becoming an "AI casualty" without strategic action.
"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 wrote in the letter, first reported by Semafor and understood by The Hollywood Reporter to have been received by the board.
Lionsgate shares closed Tuesday down 49 cents, or around 4 percent, at $11.87, after volatile trading on the New York Stock Exchange. The studio has been working to position itself as an AI adopter, having hired Kathleen Grace, a former YouTube and AI rights-tracking company executive, as its first chief AI officer earlier this year.
CEO Jon Feltheimer and Vice Chairman Michael Burns highlighted the studio's AI initiatives on an August 6 analyst call. Burns described 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." Feltheimer said the company was collaborating with creative talent and the broader workforce on AI deployment, noting that "it's saving us money. It's making us more efficient across the board."
Burns also addressed consolidation in the entertainment industry, stating that Lionsgate had not engaged in "any substantive conversations" about mergers and acquisitions. He said the company's independence as a standalone studio following its separation from Starz gave it "strategic optionality" in a rapidly consolidating marketplace.
