Netflix (NFLX) is apparently not interested in acquiring Lionsgate Studios Corp. (LION) at this point. But since streaming has become extremely profitable and competitive, while Lionsgate has developed a meaningful amount of highly popular content, the chances of the company being acquired within the next three years are quite high.
About Lionsgate
The company is a “pure-play” developer of video content, including movies and TV shows, with its stock holding a market capitalization of $4.75 billion and a price-to-sales ratio of 1.42 times.
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www.barchart.com Netflix Denies Interest in Acquiring LION
Earlier this week, speculation arose that Netflix was looking to buy LION. But Netflix denied the rumors, indicating that the streaming king has no interest in buying the relatively small content creator for now.
Streaming Remains Highly Competitive and Has Become Very Profitable
Streaming has always been very competitive. That is due to the fact that while cable channels got paid the same fees whether they drew large audiences or not, streaming channels have to convince a large number of consumers to subscribe to them in order to become profitable. As a result, streaming channels fought hard for each customer.
Historically, most streaming channels other than Netflix were unable to generate profits. But that has changed in more recent years, as the streaming businesses of Walt Disney Company (DIS), Warner Brothers Discovery (WBD), and Fox Corp.'s (FOX) Tubi have all turned profitable. Paramount Skydance Corp. (PSKY) has agreed to buy Warner Bros, but the deal has not yet closed.
As streaming firms look to boost their subscriber total in the highly competitive market in order to become profitable or boost their already-positive bottom lines, they are making acquisitions in an effort to make their content more attractive to consumers. As mentioned above, Paramount agreed to buy Warner Bros. In fact, Paramount spent a huge $111 billion on the deal. And earlier this month, Fox agreed to buy Roku (ROKU), whose Roku Channel has a great deal of enticing content, for $22 billion.
In this environment, there's a good chance that Lionsgate will be acquired within a few years.
Lionsgate Has Produced Popular Content and Positive EBITDA
Recently, LION's film, “Michael,” about pop music legend Michael Jackson, has generated almost $1 billion, and the company owns the popular “John Wick” and “Hunger Games” series. It also has the rights to Mel Gibson's two feature films, “The Passion of the Christ” and “The Resurrection Of The Christ," slated to be released in 2027 and 2028.
Making Lionsgate more alluring is the fact that it has generated significant positive EBITDA. In 2024 and 2025, its EBITDA came in at $1.2 billion and $1.145 billion, respectively. Consequently, after factoring in cost cutting, the company is likely to increase the annual profits of any company that acquires it.
Further, the firm's market capitalization of $4.76 billion is not considered very high, making it a manageable takeover target for many streaming firms, including Fox, Disney, Paramount, Comcast's (CMCSA) NBC , and Netflix.
The Bottom Line on LION Stock
Long-term investors looking for a safe name that is also likely to become a takeover target should consider buying LION stock.
On the date of publication, Larry Ramer did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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