Lionsgate Finalizes Strategic Separation of Lionsgate Studios and Starz Businesses (LION, STRZ Spin-Off)

Lions Gate Entertainment Corp., a giant in the entertainment industry, has officially completed a major strategic milestone. On April 23, 2025, the company finalized the long-planned separation of its motion picture and television studio operations from its premium subscription service business, Starz. This move comes after careful planning, regulatory navigation, and an emphatic show of support from shareholders.

The following detailed overview breaks down the background, execution, and future implications of this business separation, offering a comprehensive guide for investors, analysts, and industry observers.

Background of the Business Separation

In early 2025, Lionsgate announced its intent to streamline operations by creating two distinct public companies. Historically, Lionsgate’s media empire included a combination of television and film production assets as well as the Starz subscription streaming network. However, market trends indicated that the blended structure may have been suppressing the true value of its high-performing studio division.

The goal was to enable each business to independently pursue growth strategies, partnerships, and market opportunities without being limited by the needs of the other. This would not only potentially unlock shareholder value but also enhance operational clarity and agility.

On March 14, 2025, Lionsgate filed a detailed joint proxy statement and prospectus outlining the plan of arrangement. The company set April 23, 2025, as the date for shareholder meetings to vote on the proposals.

Shareholder Approval and Timeline of Events

Leading up to the meetings, Lionsgate and Lionsgate Studios distributed proxy materials and issued supplemental updates to ensure shareholders were fully informed. A reminder was sent out on April 17, 2025, emphasizing the importance of voting and clarifying minor updates to governance structures.

On April 23, 2025, shareholders of both Lionsgate and Lionsgate Studios approved the proposed separation with significant majorities. This approval triggered the immediate implementation of a pre-structured series of transactions that completed the legal and operational disentanglement of the two businesses.

Following the shareholder vote, a Form 8-K was filed confirming that all conditions had been met and the companies had officially completed the separation.

Details of the Separation Transaction

The separation involved multiple coordinated transactions designed to maintain shareholder alignment while creating two distinct trading entities:

• Initial Share Exchange: Holders of Lionsgate’s Class A and Class B shares received shares in New Lionsgate (later renamed Lionsgate Studios Corp.) and Starz Entertainment Corp.

• Second Share Exchange: New Lionsgate shareholders exchanged their initial allocations for shares in the new standalone companies.

• Reverse Stock Split: Starz common shares underwent a 15-to-1 reverse stock split to consolidate and align its capital structure.

• Corporate Renaming: Lions Gate Entertainment Corp. became Starz Entertainment Corp., and New Lionsgate was renamed Lionsgate Studios Corp.

The separation ensured that shareholders retained economic interests in both the studio and the media network businesses, reflecting the intrinsic value of each.

Trading and Market Implications

Following completion of the separation:

• Lionsgate Studios Corp. began trading on the New York Stock Exchange under the ticker symbol LION.

• Starz Entertainment Corp. began trading on the Nasdaq under the ticker symbol STRZ.

By establishing independent listings, the companies can now pursue distinct investor bases suited to their business models. Lionsgate Studios, focused on high-profile content production and global licensing, will appeal to investors seeking growth in traditional and streaming content markets. Starz, on the other hand, targets recurring subscription revenue, aiming to compete within the growing direct-to-consumer streaming economy.

Both entities will operate with independent boards of directors and management teams, each with deep expertise in their respective industries.

Tax and Regulatory Considerations

The transaction was intended to be generally tax-free for U.S. federal income tax purposes for holders of Lionsgate common shares. However, for Canadian shareholders, the transaction may trigger capital gains or capital losses depending on individual circumstances. Non-residents of Canada generally are not subject to Canadian tax in connection with the transaction.

Regulatory approvals from both Canadian and U.S. authorities were obtained, including necessary court orders under British Columbia law. This careful adherence to procedural formalities ensured that the separation would not be challenged on legal grounds.

Strategic Rationale for the Separation

Lionsgate’s board and management cited several compelling reasons for the split:

• Clearer Strategic Focus: With separate corporate identities, each company can better target its core competencies.

• Operational Efficiency: Independent operations reduce internal competition for resources and streamline decision-making.

• Unlocking Hidden Value: Analysts and investors had long contended that the studio assets were undervalued when combined with the slower-growth Starz business.

• Optimized Capital Structures: Tailored capital management strategies suited to the risk profiles of a production house versus a media distributor.

• Enhanced Partnership Opportunities: Each company can pursue partnerships and strategic investments independently without concerns over cross-business conflicts.

By completing the separation, Lionsgate has positioned both companies to maximize operational and financial potential in their respective markets.

What This Means for Investors

Investors now hold shares in two focused businesses with distinct growth drivers:

• Lionsgate Studios Corp. is a premier content producer, licensing films and television series across a global network of partners and platforms. It will likely seek growth through the creation of tentpole franchises, increased production output, and international expansion.

• Starz Entertainment Corp. will focus on expanding its premium streaming and cable distribution footprint, emphasizing original content and bundling strategies.

This split offers investors the flexibility to adjust their holdings depending on their market outlook. Those bullish on content production's global growth potential might focus on Lionsgate Studios. Those preferring steady, subscription-driven cash flows may lean toward Starz.

The split also makes each company a more attractive acquisition target, given their now distinct operations and simpler balance sheets.

Operations of the Standalone Starz Business

As a standalone company, Starz Entertainment Corp. will concentrate its operations on building its subscription-based media platforms. The business will continue to offer premium original series, movies, and international content bundles across its Starz-branded apps and partnerships. With a focus on expanding both domestic and international subscriber bases, Starz aims to deepen its direct-to-consumer relationships through enhanced user experience, curated programming, and strategic distribution alliances. Future initiatives are expected to emphasize original content development, multilingual offerings, and digital innovation designed to drive retention and customer loyalty in an increasingly competitive streaming landscape.

Operations of the Standalone Studios Business

Lionsgate Studios Corp., operating independently, will focus on its global film and television production and distribution businesses. The studio will leverage its robust library of intellectual property, strong development pipeline, and strategic co-production relationships to deliver premium content across theatrical, television, and streaming markets worldwide. With a rich legacy of franchises such as John Wick, Hunger Games, and other major titles, Lionsgate Studios is positioned to scale its operations, forge new content partnerships, and expand internationally. The company will also prioritize expanding its owned-and-controlled IP portfolio, driving long-term value through both traditional media channels and emerging platforms.

Risks and Considerations

As with any major corporate restructuring, there are risks. Market volatility, changes in consumer behavior, and competitive pressures from industry giants could affect both companies. Moreover, establishing two independent operating infrastructures could introduce initial inefficiencies.

However, Lionsgate’s leadership has emphasized careful transition planning to minimize disruption.

Frequently Asked Questions

When did the separation become official?

The separation was finalized following shareholder approval on April 23, 2025.

Where are the two companies trading now?

Lionsgate Studios Corp. trades under the ticker LION on the NYSE, while Starz Entertainment Corp. trades under the ticker STRZ on the Nasdaq.

What was the tax treatment of the transaction?

Generally tax-free for U.S. federal income tax purposes for most holders of Lionsgate common shares. Canadian residents may be subject to capital gains or losses.

Why did Lionsgate choose to separate its businesses?

To allow greater strategic focus, unlock shareholder value, optimize operational efficiency, and open doors for independent growth initiatives.

What are the biggest risks for investors?

Competition in both streaming and content production markets, regulatory challenges, and the operational complexities of managing independent businesses.

Lionsgate Starz Spin-Off

Lionsgate Starz Spin-Off

Important Disclaimer

This article is provided for informational purposes only and does not constitute legal, tax, investment, or financial advice. Readers are advised to conduct their own research and consult with professional advisors before making any investment decisions. While care has been taken to ensure the accuracy of this information, no warranties or representations are made regarding its completeness or reliability. Past performance is not indicative of future results. Investments in public companies involve risk, including the risk of loss of principal.