Lionsgate Studios, freshly spun off from Starz and trading under its own ticker, is already the subject of acquisition talks with Legendary Entertainment reportedly leading the charge. While the deal could revitalize both companies, it’s driven more by necessity than opportunity.
Legendary, backed by private equity firm Apollo and newly free from Chinese ownership, is eyeing Lionsgate’s deep IP library as a strategic complement to its tentpole slate. But fractured rights, aging leadership, activist pressure, and weak creative pipelines on both sides suggest this potential merger may be less a bold power play than a shared lifeboat.
Two Studios, One Future?
After years of financial engineering and strategic dithering, Lionsgate finally completed the long-anticipated split from Starz, creating two standalone entities aimed at “unlocking value.” Barely a month later, reports surfaced that Legendary Entertainment, now free of its Wanda Group ownership, is circling Lionsgate Studios for a potential acquisition. On paper, this sounds like a natural consolidation move in a fractured industry. But underneath the headlines is a complex tangle of licensing, creative instability, and mismatched governance and operational cultures.
This potential merger would combine Legendary’s blockbuster pedigree with Lionsgate’s brand-driven franchises like “John Wick,” “The Hunger Games,” and “Twilight.” But the real question isn’t library alignment—it’s whether this deal is a genuine strategic move or simply another Wall Street exit strategy for Apollo and other insiders looking to extract value from the public markets.
From SPAC to Speculation
Lionsgate Studios emerged in May 2025 as a pure-play content company via a $4.6 billion SPAC (special purpose acquisition company) deal with Screaming Eagle Acquisition Corp., supported by $225 million in PIPE (private investment in a public entity) financing. The split from Starz had been years in the making—a recurring theme since at least 2019, as FilmTake.com has chronicled extensively. Despite the fanfare, Lionsgate’s post-split shares have underwhelmed, closing at $7 with a market cap near $2 billion, even after the Legendary rumors added a 20% bump last Thursday.
Meanwhile, Legendary has undergone its own transformation. After a shaky stint under China’s Wanda Group, the studio bought out Wanda’s stake in early 2024, making Apollo Global Management a 50-50 partner. This buyout was positioned as the first step in a new growth phase, one that could include acquisitions. Reportedly, Legendary’s CEO is actively seeking billion-dollar takeover targets using Apollo’s deep pockets. Lionsgate now tops that list.
The Rights Problem
One persistent issue plaguing a Lionsgate acquisition is its fractured rights model. While the studio nominally owns premium franchises like “John Wick” and “The Hunger Games,” it has long pursued a risk-mitigation strategy by licensing away significant international and streaming rights. Lionsgate retains North American rights and has a 50/50 Latin America split, but foreign territories are often carved out to reduce exposure. As a result, many of its crown jewels provide minimal cash flow.
That setup has dissuaded tech giants like Apple and Amazon from making a move. Amazon’s $8.5 billion acquisition of MGM in 2022, widely viewed at the time as an overpayment, may have also made other streamers hesitant to pursue similarly structured libraries with fragmented rights. But it may not be a deal-breaker for Legendary. Legendary already works within a patchwork rights model—owning 20% to 50% of the IP that it co-finances with Warner Bros. This experience could make Lionsgate’s licensing quirks less of a complication and more of a familiar operating model.
What STARZ Pays for Films: Uncovering a Decade of Pay-1 Licensing Economics
Accurate Pay-1 Rates. Unique Insights. Confident Decisions.
In the opaque world of film finance and distribution, reliable data is rare, and contractual details are almost never made public. The STARZ Pay-1 Film Rate Report changes that.
This is the only resource that walks through the economics of a Pay-1 deal—complete with actual rates, contract terms, and financial triggers.
Step Inside the Deal Today with the STARZ Pay-1 Film Rate Report!
Licensing Terms & Included Programs:
The STARZ Pay-1 Film Rate Report takes you inside the Pay Television Licensing Agreement between Sony Pictures and Starz Entertainment, covering Motion Pictures released between January 1, 2013 and December 31, 2021.
- Motion Pictures: Sony Pictures shall designate “A” Pictures, “SPC” Pictures, and “B” Pictures to be licensed by Starz.
- Minimum Requirements: For a Picture to qualify under the agreement, it must have at least a 75-minute runtime with credits that does not exceed an R rating by the MPA, and
- Prints and Advertising (P&A) costs of at least $250,000, and a theatrical release on no less than 20 screens in the Territory, or
- Minimum negative costs of $4,500,000.
Governance and Creative Turmoil
Any merger would have to bridge a significant cultural and operational divide. Lionsgate, with a global workforce of over 1,400 and a leadership team that has remained largely unchanged for two decades, is often seen as a company in need of reinvention. CEO Jon Feltheimer and Vice Chairman Michael Burns continue to steer the ship, but some industry insiders question whether their tenure has run its course—one bluntly stating, “Lionsgate will have no value with Feltheimer still in place.”
Legendary, by contrast, operates with a leaner team of around 180 employees and is known for its strong creative instincts. Yet it, too, is grappling with instability, marked by high executive turnover. Neither studio is currently at its creative peak, raising questions about whether a merger would spark transformation—or compound existing challenges.
Unsurprisingly, Lionsgate’s “Ballerina” underperformed, and its Michael Jackson biopic faces early skepticism. Legendary had hits with “Dune” and Godzilla-fare, but its long-term franchise pipeline remains thin. A potential co-production agreement currently being explored by the two companies may serve as a stress test before anything formal takes shape.
Activist Pressure and Poison Pills
An added wrinkle comes from activist investor Anson Funds, which recently took a stake in Lionsgate Studios and is agitating for a sale, divestitures, and better financial transparency. Anson has urged Lionsgate to pursue merchandising, live events, and even Broadway extensions of its IP to bolster revenue. In parallel, Liberty Strategic Capital, led by former Trump Treasury Secretary Steven Mnuchin, has amassed over 12.6% of the company. Both are watching closely, and both could play kingmaker or spoiler depending on the terms of any deal.
In May, Lionsgate adopted a one-year poison pill to prevent hostile takeovers. This move suggests a board still unsure whether to cash out or continue as an independent content supplier. More troublingly, it signals that leadership may be intent on clinging to power, echoing the Redstones at Paramount, whose prolonged grip eroded shareholder value and delayed necessary change.
Starz: The Ghost in the Machine
While Starz is now officially spun off, it continues to cast a shadow. Historically, potential buyers were turned off by the need to acquire Starz along with Lionsgate’s studio operations. That burden is now lifted, but Starz’s lingering underperformance and creative struggles leave open questions about shared infrastructure and long-term licensing entanglements between the two.
The STARZ Pay-1 Film Rate Report offers rare insight into how one of the most consequential licensing arrangements in premium television was structured [More].
Still, Starz has fared better post-split and is now leaning into bundling strategies and targeting underserved demos. Whether that improved trajectory leads to new partnerships, or a separate sale remains to be seen, but its fate will indirectly impact Lionsgate’s perceived value.
FilmTake Away: Can Two Mid-Majors Make a Major?
The potential tie-up between Lionsgate and Legendary is less about synergy and more about necessity. With Apollo’s backing and Lionsgate’s IP library, the combined entity could emerge as a mid-tier content powerhouse—agile and unburdened by the costs of a full-stack streaming service. But the success of such a move hinges on effective integration and disciplined execution, two hurdles that have upended many similar deals.
This may not ultimately be a merger in the traditional sense. Strategic co-productions or licensing partnerships could allow both companies to test alignment, gain market traction, and preserve flexibility. Whether it’s a full acquisition or a looser alliance, the underlying driver is clear: both companies are seeking relevance in a market increasingly dominated by tech giants and vertically integrated studios.