Hasbro Completes eOne Purchase, Ups Licensing Revenue

Hasbro Feb. 11 disclosed it has completed its $3.8 billion acquisition of Entertainment One Ltd. (eOne). The game manufacturer’s financial results for the fourth quarter and full-year 2019 (ended Dec. 31) do not include the results of eOne, but were impacted by acquisition financing, foreign-exchange hedges and other activities associated with the deal.

The agreement aims to accelerate Hasbro’s brand portfolio with eOne’s global preschool brands, TV and film catalog (i.e. “Transformers,” “G.I. Joe,” etc.).

“The acquisition … significantly expands our expertise and capabilities as a global play and entertainment company,” CEO Brian Goldner said in a statement. “Our teams are actively engaged to unlock value across our organization — in gaming, in toys, in consumer products and in entertainment.”

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Costs associated with the transaction included $17.8 million of eOne acquisition-related costs for the fourth quarter and full-year 2019.

Full-year 2019 entertainment, licensing and digital segment net revenue increased 22% to $434.5 million, compared with $356.3 million in 2018.

Revenue included Hasbro’s share of from the Bumblebee movie, including home entertainment, consumer products revenue and higher digital gaming licensing revenue. This was partly offset by lower digital streaming revenue versus 2018’s multiyear digital streaming deal for Hasbro television programming.

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Hasbro legacy gaming revenue decreased 10% to $709.8 million. Revenue gains from “Dungeons & Dragons” and several classic games titles were more than offset by declines in other games, including Pie Face and Speak Out. Hasbro gaming revenue decreased in all three operating segments.

 

Hasbro Closes eOne Acquisition

Hasbro Dec. 30 announced that it has completed its previously announced $3.8 billion acquisition of Entertainment One Ltd. (eOne).

The all-cash transaction is valued at approximately £2.9 billion, based on the consideration of £5.60 per common share of eOne. Converted at a rate of 1.31 USD/GBP on Dec. 30, 2019, the total cash consideration was approximately $3.8 billion.

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Hasbro also expects to redeem eOne’s outstanding senior secured notes and to pay off the debt outstanding under eOne’s revolving credit facility, which together represent approximately £0.6 billion of eOne’s debt.

“Our businesses are highly complementary with substantial synergies and a great cultural fit,” Hasbro’s CEO Brian Goldner said in a statement.

Goldner said eOne “accelerates our blueprint strategy” by expanding the gamer’s brand portfolio with eOne’s global preschool brands and “proven” TV and film expertise.

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Darren Throop, CEO of eOne, will report to Goldner. In addition, eOne’s Olivier Dumont, president, family & brands, Steve Bertram, president, film & television, and Chris Taylor, global president, music, will also be joining Hasbro, reporting to Throop.

‘Bumblebee’ Movie Ups Hasbro Q3 Entertainment Revenue; Expects to Close eOne Acquisition in Current Quarter

Hasbro Oct. 22 reported a 20% increase in entertainment, licensing and digital segment revenue to $115.8 million compared to $96.8 million in the previous-year period.

Increased revenue was driven by Magic: The Gathering Arena and Paramount Pictures’ Bumblebee film revenue, partially offset by lower digital streaming revenue for Hasbro television programming.

Hasbro owns the rights to the “Transformers,” “G.I. Joe,” “Dungeons & Dragons” and “Micronauts” brands on which Paramount bases much of its theatrical slate.

Netflix is reportedly on board to produce the “Magic” feature film after a previous deal with 20th Century Fox never materialized.

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Entertainment, licensing and digital segment operating profit decreased 21% to $24.6 million versus $37.1 million in 2018. The decline was the result of several factors, including higher operating profit margin in Q3 2018, due to the multi-year digital streaming agreement for Hasbro television programming.

Separately, CEO Brian Goldner said he expects to close Hasbro’s $4.3 billion acquisition of Canadian-based eOne in the current quarter.

“The strategic opportunity to bring onboard the brands, capabilities and talent from eOne is compelling to our long-term prospects as a leading global play and entertainment company and we look forward to sharing more about our plans after the close,” Goldner said in a statement.

Universal Pictures Home Entertainment and eOne in March signed a multiyear, multi-territory distribution agreement whereby UPHE will serve as the home entertainment distributor of eOne’s content across both transactional physical and digital formats.

Finally, Goldner said ongoing proposed government tariffs on Chinese manufactured goods would negatively impact product shipments and retailers entering the key winter holiday season.

CFO Deborah Thomas said the company experienced higher shipping and warehousing expenses as a result of the disruption and shift of retailer order patterns from proposed tariffs.

“Hasbro’s global teams are executing within a dynamic trade environment that is impacting the timing of revenues, driving incremental expenses and putting upward pressure on our underlying tax rate,” Thomas said.

Net revenue for the third quarter was $1.58 billion versus $1.57 billion in 2018. Net income was nearly $213 million compared to income of $264 million last year.

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.

Universal Inks Home Entertainment Distribution Deal with Entertainment One

Universal Pictures Home Entertainment has 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.

The pact covers film, television and select family content and includes all sales, marketing and distribution, spanning the United States, Canada, the United Kingdom, Germany, Spain, Australia and New Zealand.

“This new global partnership with Universal builds on our shared commitment to bring compelling content to audiences around the world,” said Steve Bertram, eOne president, film and television, in a statement. “Our recent and upcoming collaborations on titles from eOne partners MAKEREADY, DreamWorks Pictures and Participant Media underscore the strong foundation for our growing relationship. As eOne continues to expand its focus on producing and financing premium film and television properties, we are very excited to partner with UPHE whose expertise, scale and deep customer relationships have made them market leaders year after year.”

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“UPHE is very pleased to become eOne’s home entertainment distributor in territories around the world,” said Eddie Cunningham, president, Universal Pictures Home Entertainment, in a statement. “We are delighted to add eOne’s premier entertainment portfolio to UPHE’s global distribution organization and look forward to working with our physical and digital retail partners to drive this business forward.”

The agreement complements the existing theatrical marketing and distribution partnership between eOne and Universal Pictures International announced earlier this year for the Australian and New Zealand markets. UPHE will also begin to market and distribute eOne’s catalog of new and existing properties in Australia in May, beginning with the Academy Award Best Picture winner Green Book.

Netflix to Develop Series, Films Based on C.S. Lewis’ ‘Chronicles of Narnia’

Netflix will develop new series and film projects based on C.S. Lewis’ “The Chronicles of Narnia” series.

Under the terms of a multi-year deal between Netflix and The C.S. Lewis Co., Netflix will develop stories from across the Narnia universe into series and films for its members worldwide. All series and films produced through the deal will be Netflix productions, with Mark Gordon of Entertainment One (eOne) alongside Douglas Gresham and Vincent Sieber serving as executive producers for series and as producers for features.

In total the Narnia books have sold more than 100 million copies and been translated in more than 47 languages worldwide. The deal marks the first time that rights to the entire seven books of the Narnia universe have been held by the same company.

“C.S. Lewis’ beloved Chronicles of Narnia stories have resonated with generations of readers around the world,” said Ted Sarandos, chief content officer, Netflix. “Families have fallen in love with characters like Aslan and the entire world of Narnia, and we’re thrilled to be their home for years to come.”

“It is wonderful to know that folks from all over are looking forward to seeing more of Narnia, and that the advances in production and distribution technology have made it possible for us to make Narnian adventures come to life all over the world,” said Douglas Gresham, stepson of C.S. Lewis. “Netflix seems to be the very best medium with which to achieve this aim, and I am looking forward to working with them towards this goal.”

“Narnia is one of those rare properties that spans multiple generations and geographies,” said Mark Gordon, eOne’s president and chief content officer, film and television. “eOne and I are excited to be collaborating with The C.S. Lewis Company and Netflix who have the capacity to translate the Narnia universe into both stellar feature-length and episodic programming. We cannot wait to get started on the multiple productions we hope to undertake.”

Entertainment One Appoints Mark Gordon President and Chief Content Officer

Independent studio Entertainment One has appointed Mark Gordon president and chief content officer, film, television and digital, and has agreed to acquire the remaining 49% of The Mark Gordon Co. for $209 million subject to shareholder approval.

In this newly-created role, Gordon will lead the company’s creative units.

Steve Bertram was also appointed president, film, television and digital. In his new role, Bertram will oversee all commercial and distribution operations.

Gordon and Bertram will drive the growth of eOne’s content groups and distribution platforms, accelerating its strategy to increase the volume of premium content, according to the company.

“Mark Gordon is one of the industry’s most accomplished film and television producers with a long track-record of success and commitment to putting talent first. Mark’s leadership over content creation across eOne underscores our vision to be the preeminent platform-agnostic content company in the world,” said Darren Throop, eOne CEO, in a statement. “Today’s transaction signals that we are focused on investing heavily in the best creative talent. This is where Mark shines and what we know he’ll continue to do well into the future with eOne and all of our resources fully behind him.”

“Darren’s commitment to support our vision gives me confidence that we will achieve the quality and volume of premium content on a much broader scale both domestically and internationally,” said Gordon, in a statement. “Ultimately, it is the creative partnerships with producers, writers, directors and actors that will bring us success. It is our mission to provide them the opportunity to tell great stories and to be financially rewarded for their work.”

“Mark’s unwavering support of creative talent and relentless pursuit of the highest quality content have been the foundation of his success,” added Bertram, in a statement. “His creative instincts, deep relationships, and unique understanding of the content audiences crave, have supercharged our business over the past three years. I couldn’t be more excited to unleash that power across eOne, and to leverage eOne’s global resources to extend Mark’s talent-friendly approach.”

Entertainment One acquired 51% of The Mark Gordon Co. in January 2015. Since then, the two companies have collaborated to establish an independent studio, producing and financing film, network, cable, and digital premium content, distributed by eOne around the world. Most recently, under Gordon’s leadership, MGC has produced feature films such as Murder on the Orient Express; the Golden Globe and Academy Award nominated Molly’s Game; and the upcoming The Nutcracker and the Four Realms. He has also led the company in producing television series such as “Designated Survivor” and “The Rookie.”

John Morayniss, who led eOne’s television business since its inception in 2008, has decided to step down, but will remain with the company to help facilitate a smooth transition, according to eOne.

“I want to recognize John, whose focus, innovative deal-making and charismatic leadership of our television business over so many years has helped make us the global force we are today. John’s relationships across the industry resulted in exponential growth across eOne’s television business in Canada and around the globe, and he leaves us with incredible momentum. I’m thankful for his continuing support through the transition,” Throop said in a statement.