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Lions Gate stock split: Can Jon Feltheimer’s Starz spinoff revive slumping LGF shares?

By Alejandro Arrieche

Edited by Jekaterina Drozdovica

15:36, 22 November 2022

Cellphone with logo of company Lions Gate Entertainment Corporation (Lionsgate) on screen in front of website.
Lions Gate is planning on spinning off its studio and streaming businesses. Photo: T. Schneider / Shutterstock

The stock of Lions Gate (LFG) suffered a setback in 2022 dropping by over 50% year-to-date amid cord-cutting and fears of recession

In May’s fourth-quarter earnings call, Lions Gate’s CEO said the company was exploring a spin-off of Starz, its streaming division. Meanwhile, in a more recent filing, the entertainment firm mentioned a spin-off of the studio business too.

Will the Lions Gate stock split boost the share price? Here we take a look at the company and the latest news on its spin-off plan. 

Note that the corporate split of Lions Gate businesses discussed in this article is different to a stock split, whereby a company’s shares are divided, decreasing the individual stock price.

What is Lions Gate (LGF)? 

Lions Gate was founded in 1997 by Canadian businessman Frank Giustra. 

The company generates revenues from two segments: its studio business and the streaming platform Starz. Lions Gate has an extensive library of more than 17,000 movies and TV series titles. The content is sold or leased to third parties, or streamed on Starz for a subscription fee. The bulk of the firm’s revenues come from the sale of its theatrical, home entertainment and television shows. 

As of November 2022, Lion Gate’s CEO was Jon Feltheimer, who has occupied the role since 2000. As of May 2022, the firm had 1,448 full-time employees. The Lion Gate’s headquarters are in Santa Monica, California.

Lions Gate stock is listed in the New York Stock Exchange (NYSE) and trades under the ticker symbol ‘LGF’. 

Lions Gate stock has lost over 50% of its value year-to-date, as of 22 November. The stock has been on a downtrend since 2018 highs, when it hit an all-time high of over $35.

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Is a Lions Gate stock split expected to occur?

A stock split of the entertainment business is not scheduled. The Lions Gate stock split history showed that the company has never performed a stock split. A corporate split was discussed in May 2022. 

During a conference call Feltheimer stated that the leadership team was “creating a structure to allow investors to value our Starz and Studio assets separately by spinning off Starz”.

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Meanwhile, on 28 September the firm announced that it was rebranding STARZPLAY streaming platform to LIONSGATE+, with the new brand rolling out on 29 September. 

Lions Gate also confirmed that it’s still working on the details of the Lions Gate spinoff while focusing on a scenario that involved the spin-off of its studio business rather than its media network unit. 

According to a statement by the Lions Gate vice chair Michael Burns at the RBC media conference, the Starz spin-off could complete before the end of the second quarter of the 2023 fiscal year, before September 2023. 

The spin-off could lead to a Starz IPO, seeing the streaming brand compete with the likes of Netflix (NFLX) and Disney (DIS). 

The rationale behind the spin-off is that, as a standalone business, it would be easier to assign a more adequate valuation for the separate companies. Most analysts focus on Lions Gate’s studio business performance, as it generates most of the company’s revenue.

After the spin-off, it will be possible to value Starz similarly to its aforementioned competitors. As a result, Lions Gate could see its Starz subsidiary receive a more favorable appraisal, which could have a positive impact on the share price.

“Our thesis on [Lionsgate] is that it’s worth more apart than together as we primarily think the studios are a rare gem,” commented analysts at Wells Fargo in May after the company’s intentions were first floated.

In 2016, Lions Gate acquired Starz for $4.4bn in a cash-and-stock deal. The streaming platform had 25 million subscribers and a library of over 16,000 titles. In November 2021, the company tried to sell Starz for the first time, citing a similar rationale. However, no deal came to fruition. 

The Lions Gate stock consensus rating was a ‘moderate buy’, as of 22 November, based on four analysts’ recommendations, with two rating the stock as a ‘hold’ and another two a ‘buy’, according to data compiled by MarketBeat. The average price target for LFG stock stood at $25 a share, ranging from the low of $13 to the high of $25.

Note that analysts’ predictions can be wrong and should not be used as a substitute for your own research. Always conduct your own due diligence before trading, looking at the latest Lions Gate stock split news and analysis. Remember, past performance does not guarantee future returns. And never trade money you cannot afford to lose. 

FAQs

Is Lions Gate a buy?

The Lions Gate stock consensus rating was a ‘moderate buy, as of 22 November, based on four analysts’ recommendations, with two rating the stock a ‘hold’ and another two a ‘buy’. Note that analysts’ views can be wrong. 

Always conduct your own due diligence before trading, looking at the latest news and analysis. Remember, past performance does not guarantee future returns. And never trade money you cannot afford to lose.

Is Lions Gate a public company?

Yes. Lions Gate is a publicly traded company, its shares are listed on the NYSE under the ticker symbol LGF.

When did Lions Gate stock split?

An LGF stock split has never occurred. Yet the company is planning a corporate split, spinning off its studio and streaming businesses.

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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