Entertainment One specialises in the development, acquisition, production, financing, distribution and sales of entertainment content. Its rights library is valued at US$2.0bn and is exploited across all media formats.
Entertainment One’s revenue mix continues to shift to Family & Brands, where good momentum continues behind Peppa Pig and PJ Masks, especially in China. The trailer for the Peppa Pig movie, released for Chinese New Year, went viral, while box office receipts were a reported US$14m in its first three days. Film & TV is part-way through its transition from distribution to content production, with divisional EBITDA also affected by an H2-weighted release schedule. The net effect was a group EBITDA margin of 14.8% (H118: 13.3%) at the halfway stage. CEO Darren Throop sold 1.5m shares to fund a personal project, but retains a holding of 7.2m. Changing consumption patterns provide a strong backdrop to high-quality content providers such as eOne. We regard the shares as attractively priced on earnings and with regard to the portfolio valuation of $2.0bn.
SVOD is rapidly gaining share, growing at a reported 20% CAGR. Competition between platforms is driving the requirement for premium content and, despite the proliferation of non-linear distribution channels, there is still a tendency for the audiences to gravitate towards particular hits. This is driving a trend to high production values, with the real underlying competition to grab and maintain audience attention.