Hasbro to Acquire Indie Studio Entertainment One for $4 Billion

Hasbro Aug. 22 announced it is acquiring independent studio Entertainment One (eOne) in an all-cash transaction valued at about $4 billion.

Hasbro, which has dabbled in entertainment through the “Transformers” franchise, including recent release Bubblebee with Paramount Pictures, is seeking to expand its film and gaming business opportunities via eOne’s family brands, including “Peppa Pig.”

“Hasbro will leverage eOne’s immersive entertainment capabilities to bring our portfolio of brands that have appeal to gamers, fans and families to all screens globally and realize full franchise economics across our blueprint strategy for shareholders,” Brian Goldner, CEO of Hasbro, said in a statement.

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The acquisition seeks to use eOne’s content across platforms to strengthen Hasbro’s ability to monetize and bring to market its IP in new formats, including over-the-top (OTT) video and premium platforms, music, location-based entertainment, AR and VR.

Hasbro expects to realize in-sourcing and other global annual synergies of approximately $130 million by 2022, driven by integration benefits, substantial savings from moving a significant portion of eOne’s toy business in-house and enhancing the profitability of eOne’s licensing and merchandising activities.

“By combining two profitable and financially disciplined companies we expect to unlock value in the short- and long-term for our stakeholders,” said Hasbro CFO Deborah Thomas. “eOne’s brands and TV and film expertise, together with Hasbro’s brands, toy and game innovation and licensing capabilities, positions us to more quickly drive revenue and profit over the medium-term.”

Earlier this year, Universal Pictures Home Entertainment signed a multiyear, multi-territory distribution deal to serve as the home entertainment distributor of Entertainment One’s titles across both transactional physical and digital formats.

Indeed, the acquisition of preschool brands offers a growth opportunity for Hasbro in the “infant and preschool” category, the largest super-category in the toy and game industry, according to The NPD Group.

A slate of additional brands is under development, including “Ricky Zoom,” a storyline airing on Nickelodeon in the U.S. and other global networks, beginning Sept. 9.

In film, eOne has been transforming its business to focus on titles like Clifford the Big Red Dog and Monster Problems. The studio’s Canadian TV and  film operations will continue as a Canadian-controlled business within the combined businesses.

Hasbro said eOne senior management would be making the transition to Hasbro, whose global organization includes offices in London, Los Angeles, Toronto, New York, Hong Kong, Melbourne and Shanghai.

eOne’s Canadian presence is an important base for creative talent and best-in-class studio capabilities, significantly expanding Hasbro’s Canadian presence and positioning eOne for ongoing success in Canada, including in relation to its robust pipeline of television and film projects.

The transaction is structured to ensure that eOne’s Canadian operations will continue to meet applicable Canadian control regulatory requirements in relation to television and film production companies, to the continued benefit of the Canadian television and film production industry.

Sony Downsizing PlayStation Vue?

Sony Interactive Entertainment reportedly is scaling back its involvement with local television affiliates for its branded PlayStation Vue online TV service.

Cord Cutter News, citing emails sent to affiliates from Sony, said the 4-year-old platform is looking to “deprioritize” Vue in marketing efforts across third-party websites.

Launched in 2015, the same year as Dish Network’s pioneering SlingTV, Vue has struggled to generate significant subscriber scale. The platform reportedly has about 800,000 subs — which pales in comparison to Sling’s 2.3 million.

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In fact, Vue also trails DirecTV Now, which AT&T is rebranding as “AT&T Now,” YouTube TV and Hulu with Live TV.

Vue in July upped the monthly fee of its basic plan by $5 for existing subscribers to $50 monthly, with additional programming tiers “Elite” and “Ultra” priced at $65 and $85, respectively.

A rep from Sony Interactive Entertainment wasn’t immediately available for comment.

Early ‘Madden 20’ Football Release Helps Jumpstart July Video Game Sales

The early release of Electronic Arts Sports’ annual NFL video game, Madden 20, helped boost July video game sales from the previous-year period, according to new data from The NPD Group.

Total sales topped $762 million from $759 million last year. Software sales skyrocketed 34% to $340 million from $253.7 million — largely due to football.

Hardware sales continue to suffer as consumers await pending new edition consoles from Sony and Microsoft. Console revenue fell 22% to $169 million from $216.6 million. Accessories fell 12% to $254 million from $288.6 million.

Through July, game revenue is down 4% at $6.4 billion from $6.6 billion last year.

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The annual football video game featuring former NFL coach John Madden was released in July instead of August in part to its inclusion of select college teams.

NCAA-sanctioned games have been shelved in recent years following litigation from some players regarding lack of compensation for their likeness or name featured in games and marketing.

The NCAA reached a $20 million settlement in 2014 with plaintiffs, who included lead plaintiff and former UCLA basketball player Ed O’Bannon. It was also the last licensed year for college-themed sports video with NCAA 14.

Madden 20 features a new segment, “Face of the Franchise: QB1,” showcasing elite quarterbacks beginning with their collegiate careers.

EA reached license agreements with 10 colleges: Clemson, Florida, Florida State, Miami, LSU, Oregon, University of Southern California, Texas, Oklahoma and Texas Tech.

CEO: ViacomCBS Merger Offers ‘Unmatched Scale’

Corporate synergy and scale are two key economic points underscoring the $30 billion re-merger of Viacom with CBS.

Speaking Aug. 14 with CNBC, Robert Bakish, current Viacom CEO and future head of the renamed ViacomCBS, said the combined media company would offer “unmatched scale” with 140,000 television catalog episodes and 3,600 movies, including content from Paramount Pictures and CBS Studios.

Bakish said CBS’ early move toward direct-to-consumer content distribution with CBS All Access and Showtime OTT, and Viacom’s acquisition of ad-supported VOD service Pluto TV well-positioned the rebooted media company in the in the streaming video era .

“[That’s] not something people have talked about a lot [regarding the merger],” he said.  “You unite those two together and you really have a D-to-C ecosystem. Very compelling, both with substantial — millions of users.”

When asked whether ViacomCBS could successfully match Disney, Netflix or WarnerMedia, Bakish said scale could be viewed subjectively.

“Between the studios that we operate, Paramount, CBS Television Studios, Nickelodeon Animation and Viacom International Studios, we have 750 series ordered or in production. There is true content scale here,” he said.

“There’s no question the companies are stronger together than they were independently. And, you know, we’re going to start executing with that.”

The executive defended the companies’ downward revised cost savings from $1 billion to $500 million.

“This is excluding programming, excluding marketing, excluding revenue. So, there’s a very material opportunity. And as we get into it we’ll move forward and begin to realize that [cost saving],” Bakish said.

The initial pushback on the deal from former CEO Les Moonves disappeared following  the executive’s ouster due to #MeToo allegations.

Bakish contends the cultures at Viacom and CBS have a lot in common — with both companies focused the content creation and distribution.

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“An employee of CBS News loves CBS News, just like an employee at MTV loves MTV,” he said. “There’s incredible value in the combination. You look at the strategy we’re going to start executing against. Building a real leadership position in D-to-C through this combination of subscription product and ad-supported product. This ecosystem, tremendous opportunity there. You look at expanding the partnerships and building new partnerships with advertisers, with distributors. Tremendous opportunity there for all of the people that work in that area. You look at being one of the most significant content suppliers in the world. Tremendous opportunity there. So, I think very quickly this culture will come together.”

With Moonves out, former CFO Joe Ianniello has held the acting CEO position. Following closure of the merger, he will become CEO of CBS, reporting to Bakish.

Ianniello reportedly has a clause in his employment contract paying him $70 million severance should he not retain the top executive job.

“I’ve known Joe Ianniello for 20 years,” Bakish said. “I have tremendous respect for what he’s done at CBS. He’s clearly a world class executive. He and I have spoken a lot in the days leading up to yesterday. And including yesterday. And there is a tremendous interest, joint interest, in unlocking the value of these combined companies.”

Bakish said Ianniello would take the leadership position, running the CBS branded assets upon closing.

“We need someone to run those assets,” he said. That’s a big complicated business. He is ideally suited to do it because he has, you know, 20 years of knowledge in that space and a real passion for it. At the same time, he knows that we have to create value from these assets. We are going to have to work across the company. He’s 100% committed to it and I can’t wait to get on with it with him.”

 

Digital Media Companies, Trump Unite Against New French Tax

Digital media companies, including Amazon, Apple, Google and Facebook, are getting an unlikely assist from President Trump against a proposed 3% tax in France on revenue derived from digital ad services and user-to-user transactions.

Specifically, the tax targets revenue derived in part off of French consumer online activities, including ecommerce, streaming video and audio.

Trump & Co. are crying foul since the tax largely applies to about 30 American companies generating at least €25 million ($27.8 million) in France and €750 million ($842 million) worldwide.

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France, which has tried unsuccessfully to secure European Union support on the move, argues the traditional system doesn’t work on these companies since they operate internationally with little physical presence in the country.

“This is a concern for international trade and the wider economy if countries follow the [Digital sales tax] model and select specific sectors and groups of foreign companies for targeted tax policies,” Nicholas Bramble, trade policy counsel at Google, said in a statement.

“The French tax is unjustifiable in that it infringes international agreements, and unreasonable in that it is discriminatory, retroactive and inconsistent with international tax policy principles.”

“They shouldn’t have done this,” Trump told the media in July. “I told them, I said, ‘Don’t do it because if you do it, I’m going to tax your wine.’”

France contends the tax would help level the playing field.

“These digital giants use our personal data, make huge profits out of these data then transfer the money somewhere else without paying their fair amount of taxes,” said French finance minister Bruno le Maire.

Best Buy, Roku, Apple Shares Rebound Following Tariff Delay

Shares of Best Buy, Roku, Apple and other consumer electronics retailers/manufactures rebounded after President Trump delayed until Dec. 15 a proposed new 10% tariff on cellphones, laptop computers, video game consoles and other goods manufactured in China.

The tariff on $300 billion worth of products, which Trump announced Aug. 1 as part of ongoing trade tensions with the world’s No. 2 economic power, would have been on top of an existing 25% tariff Trump previously imposed on $250 billion worth of other Chinese goods.

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The delay came after intense lobbying efforts in the nation’s capital convinced administration officials the new tariff could have serious implications to the U.S. economy entering the fourth quarter.

“Just in case they might have an impact on people … what we’ve done is we’ve delayed it so they won’t be relevant for the Christmas shopping season,” Trump told reporters on Aug. 13.

The news was welcomed by Wall Street, which saw shares of Best Buy, Apple and Roku rise 6.5%, 4% and 1%, respectively.

Roku is one of the largest manufacturer of Internet-connected televisions, with many originating from China.

But to the Consumer Technology Association trade group, delaying proposed tariffs only prolongs market uncertainty and impacts consumers 401(K) pension or retirement accounts, among other issues.

“Retaliatory tariffs are bad economic policy in the short and long term,” Gary Shapiro, CEO of the CTA, said in a statement. “The administration’s legally dubious trade war is compromising America’s global leadership.”

Previously-announced tariffs starting Sep. 1 will affect $52 billion in consumer technology products, and the tariffs starting Dec. 15 will affect $115 billion in products. Since July 2018, Section 301 tariffs on China have cost the consumer tech industry over $10 billion, including $1 billion on 5G-related products, according to the CTA.

“Tariffs are taxes,” Shapiro said. “The Chinese government doesn’t pay for them – Americans bear the burden. And next month, we’ll begin to pay more for some of our favorite tech devices – including TVs, smart speakers and desktop computers. The administration should permanently remove these harmful tariffs and find another way to hold China accountable for its unfair trading practices.”

CBS, Viacom Agree to $30 Billion Re-Merger

Thirteen years after Viacom spun off CBS as a wholly owned subsidiary, the two companies are re-merging under the same corporate umbrella.

The two entertainment companies Aug. 13 announced a definitive agreement to combine in an all-stock $30 billion merger, creating a combined company — ViacomCBS Inc. — with more than $28 billion in revenue.

CBS shareholders will own approximately 61% of the combined company and Viacom shareholders will own approximately 39%.

The combined company will be led by Bob Bakish, current CEO of Viacom, with Joe Ianniello, acting CEO at CBS, becoming president/CEO of CBS.

The two companies, whose assets include Paramount Pictures, BET, MTV, Comedy Central, Showtime, CBS All Access, among others, expect to save $500 million in combined synergies — about half of what they originally sought.

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The pact was spearheaded by Shari Redstone, who runs National Amusements Inc., parent to both Viacom and CBS, for her ailing father, Sumner Redstone. NAI holds approximately 78.9% and 79.8% of the Class A voting shares of CBS and Viacom, respectively.

Shari Redstone has eyed the reunion as a means for Viacom and CBS better competing against a rapidly evolving media landscape, which includes subscription streaming video-on-demand.

“My father once said ‘content is king,’ and never has that been more true than today,” Redstone said in a statement. “Through CBS and Viacom’s shared passion for premium content and innovation, we will establish a world-class, multiplatform media organization that is well-positioned for growth in a rapidly transforming industry.”

ViacomCBS contends it would be better able to scale globally, with leadership positions in markets across the U.S., Europe, Latin America and Asia.

In addition to a significant television business in the U.S., the combined company possesses a portfolio of direct-to-consumer platforms, including both subscription (CBS All Access, Showtime OTT) and ad-supported (Pluto TV) offerings. It also includes Paramount Pictures and Paramount Home Entertainment.

“Today marks an important day for CBS and Viacom, as we unite our complementary assets and capabilities and become one of only a few companies with the breadth and depth of content and reach to shape the future of our industry,” Bakish said in a statement.

Ianniello said the merger brings a new set of opportunities to both companies.

“At CBS, we have outstanding momentum right now — creatively and operationally — and Viacom’s portfolio will help accelerate that progress,” Ianniello said.

In addition to Bakish and Ianniello, the company will include Christina Spade as EVP and Chief Financial Officer, and Christa D’Alimonte as EVP, General Counsel and Secretary.

The deal was originally delayed after former CBS boss Les Moonves sought the CEO position among the combined companies. Shari Redstone wanted Bakish.

Moonves dropped out of discussions when he was forced out at CBS following a series of #MeToo allegations.

Pay-TV Lost 1.5 Million Subs in Q2

As expected, pay-TV took another beating when it comes to retaining video subscribers.

New data from Leichtman Research Group found that the largest pay-TV providers in the U.S. — representing about 93% of the market — lost about 1.53 video subscribers in the second quarter, ended June 30.

The loss was up 264% compared with a net loss of about 420,000 video subs in the previous-year period.

The top pay-TV operators now have about 86.6 million subs — with the top seven cable companies having 46.5 million video subscribers, satellite TV services 27.5 million subs, the top telephone companies 8.8 million subs, and the top publicly reporting online TV services 3.8 million subs.

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Satellite TV services lost about 855,000 subs compared to a loss of about 480,000 subs in 2018. AT&T-owned DirecTV had record losses for the fifth consecutive quarter, while Dish TV had fewer losses than in any quarter since Q4 in 2014.

The top seven cable companies lost about 455,000 video subs compared to a loss of about 275,000 subs in 2018. Cable losses were more than in any quarter since Q2 2014.

The top telephone providers lost about 100,000 video subs compared to a loss of about 45,000 subs in 2018.

Online TV services, Sling TV and DirecTV Now, lost 120,000 subs compared to about 385,000 net adds in 2018.

Over the past year, top pay-TV providers had a net loss of about 5 million subs — compared to a loss of about 1.o6 million subs over the prior year.

Over the past year, DBS services lost about 3.175 subs — compared with a loss of about 1.59 subs over the prior year.

Over the past year, online TV services lost about 340,000 subs — compared to a gain of 1.84 subs over the prior year.

“This marked the fourth consecutive quarter of record pay-TV industry net losses,” principal analyst Bruce Leichtman said in a statement. “With an increased focus on acquiring and retaining profitable subscribers, DBS services accounted for more than half of the net pay-TV losses in 2Q 2019, and 63% of the losses over the past year.”

Viacom, CBS Agree on Merger Price

The expected re-merger between Viacom and CBS has reportedly found common ground on the all-stock transaction’s price at around Viacom’s $12 billion market valuation.

Bloomberg, citing sources familiar with the deal, says the merger, which would re-unite parent Viacom and CBS after 13 years, could be announced as early as today.

Specifically, Viacom would get 0.59625 a share of CBS for each of its own shares. A year ago, Viacom had sought 0.6135 a share of CBS.

The two companies, whose assets include Paramount Pictures, BET, MTV, Comedy Central, Showtime and CBS All Access, among others, are looking to save $500 million in combined synergies — about half of what they originally announced.

The deal was originally delayed after former CBS boss Les Moonves sought the CEO position among the combined companies. Shari Redstone, who runs Viacom/CBS parent company, National Amusements Inc. for her ailing 94-year-old father, Sumner Redstone, wanted Bob Bakish, CEO of Viacom, to hold the position.

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Moonves dropped out of discussions when he was forced out at CBS following a series of #MeToo allegations.

Now Bakish is seen inheriting the CEO position, which leaves acting CBS CEO Joe Ianniello’s position unknown.

 

HBO Max, BBC Partner for New Original Comedy Series

WarnerMedia’s pending subscription streaming video service HBO Max has partnered with BBC Three for new London-based comedy series “Starstruck.”

The six-part show is written, created by and starring 2018 Edinburgh Comedy Award winner Rose Matafeo.

The show, which will also be broadcast in the U.K., follows twentysomething Rose (Matafeo), a millennial juggling two dead-end jobs and navigating the awkward morning-after when she discovers the complications of accidentally sleeping with a movie star.

Rose Matafeo

“The BBC have been so supportive of this project from the get-go and to be able to get this show in front of American audiences at the same time via HBO Max is truly exciting,” Matafeo said in a statement. “I’m thrilled we get to make it, otherwise it would’ve technically just been a creepy fan fiction script that I submitted to the national broadcaster.”

“The minute we were introduced to Rose and ‘Starstruck,’ we knew we had something special,” said Sarah Aubrey, head of original content, HBO Max. “She is exactly the type of original, culture-forward creator we are excited to be working with at HBO Max and we are looking forward to a long partnership.”

Aubrey, along with other Max executives, is profiled in the “2019 Women in Home Entertainment” issue of Media Play News.

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Matafeo won “Best Comedy Show” for her solo show “Horndog,” which has enjoyed sell-out performances around the world, including the New Zealand International Comedy Festival and a Barry Award nominated run at the Melbourne Comedy Festival.