Entertainment One Share Discussion Threads

[ianood] 06/10/2016 19:29

I confess to owning both and adding to my ITV again earlier this week, probably got that the wrong way round as I don't believe ITV will issue any paper.

[1gw] 06/10/2016 19:28

"dead cert they come back for it"

While as a long I'm happy to see such a sentiment expressed, it seems a surprisingly categoric statement from you, raffles?

[ianood] 06/10/2016 19:25

And as you so rightly pointed out previously, there are disposals that could be made and at good prices. This really looks exciting

[raffles the gentleman thug] 06/10/2016 19:08

But the point is it adds value even at 300p!!

If one includes £215m of production financing then they would be overall debt financing an enterprise value of £1,630m (mkt cap £1,290m and net debt of £340m based on forward Mar 2018 earnings). Thats going to cost them about £65m/£70m in annual interest charges, perhaps a little more, and in return they pick up £150m of pre-tax earnings. And this is double counting the interest expense, so the real pre-tax (ex interest expenses) would be about £172m.

So at 300p thats back of the envelope accretion to ITV earnings per share of at least 1.7p a share before one even includes any synergies - of which there are many.

The point is this gives ITV earnings growth, which it currently doesn't have, represents around 2.5 years of free cashflow, possibly less when pension provisions subside, and gets EPS back over 18p a share where expectations were back in March 2016, when the shares were trading along at 230p to 240p.

In my opinion no wonder why they are hopping mad with JPM and dead cert they come back for it.

[raffles the gentleman thug] 06/10/2016 18:49

Without wishing to spread undue speculation I agree with you.

I think a deal with ITV would have pushed borrowing past their 1.5x debt to EBITDA limit, and some shareholders were squealing about likely non-payment of the special dividend as a result.

Then I think ITV didn't want the whole business, and were possibly duped into believing another party would bid, break the business up and sell them Television and Family. And for whatever reason that hasn't materialised.

I think ITV need it. They won't find another independent production company of this size, which at a stroke it would would have increased non-NAR EBITDA from 25% of total to 35%, and even at a price of 250p would have added as much as 1.5p onto earnings per share and gotten their own share price heading toward 220p by now.

And quite soon ITV shareholders will change their tune and recognise the beneficial need in this industry of investing free cashflow rather than paying it out continuously. And certainly with ITV high payout ratios are scant compensation when the shares are trading back below average level of 2014.

[ianood] 06/10/2016 18:37

I'm convinced that ITV have not walked. Part 2 shortly!

[raffles the gentleman thug] 06/10/2016 18:34

ianood ... very difficult to know what went on behind the scenes other than the fact ETO on their part took it seriously and has a six hour board meeting to consider it. It sounded like they were waiting for ITV to come back and were completely perplexed that it had not gone further.

As for ITV it did make them look like amateurs having looked at it from the start of the year, waffling publicly about strong strategic logic of a tie up, yet being unprepared to pay the even the same multiple for a fast growing business as they themselves were trading on. Strange

[ianood] 06/10/2016 18:19

I'm surprised that the mighty JPM screwed it up so badly! It's most unusual for them and to lose a FTSE 100 account just like that is really unbelievable. There must have been a real bust-up. Lets see if we get a renewed bid advised by Citi?

[raffles the gentleman thug] 06/10/2016 12:51

ITV position with JP Morgan is interesting though since it demonstrates they must have been quite annoyed with the way things turned out.

Good news is ETO now getting firm market support on its fundamentals, rather than upon bid prospects, meaning whoever wants it will have to pay a sensible price, and not an opportunistic one.

[fruitninja84] 06/10/2016 12:31

Well I took some on today's weakness, on the basis that it's trading on a discount to its catalogue and that it will likely be taken out at some point in the not to far future ...

[raffles the gentleman thug] 06/10/2016 12:23

Dunno ... there was obviously strategic logic, but its anyone's guess.

Bigger question for them now though is what happens if, as rumoured, Disney acquire Netflix. One analyst is out there saying it will lead to a frenzy of deal making in television broadcasting

[tini5] 06/10/2016 12:13

Interesting. I wonder if ITV will rearm for another shot at ETO?

[raffles the gentleman thug] 06/10/2016 12:10

ITV has dropped its corporate broker JP Morgan over the failed attempt to but ETO and appointed Citigroup instead


hxxps://www.c21media.net/itv-drops-jp-morgan-after-eone-failure/

[tini5] 06/10/2016 11:19

Launching PP in Korea.

eOne readies Peppa Pig broadcast and licensing launch in South Korea.

‘We are delighted to be taking our first steps into the Korean market with Peppa Pig,’ says eOne’s Dorothy Chan.

Entertainment One’s (eOne) hit pre-school show, Peppa Pig, is gearing up for a new broadcast and licensing launch in South Korea.

The first series of the show is set to air from October 10th on the country’s animation channel, CJ Tooniverse.

Full article: hxxp://www.licensing.biz/news/read/eone-readies-peppa-pig-broadcast-and-licensing-launch-in-south-korea/044729

[rivaldo] 05/10/2016 16:11

PJ Masks HQ is one of the 8 hot toys for the season voted for by the Toy Insider panel for 3-5 year olds:



And PJ Masks superhero costumes have been the most popular costume for Halloween in this Texas shop:

[tini5] 04/10/2016 11:11

Entertainment One will be unveiling a raft of opportunities for the hit preschool property, PJ Masks that shot to global fame having hit TV screens around the world earlier this year.

hxxp://www.licensing.biz/news/read/ble-2016-peppa-pig-and-pj-masks-head-eone-s-strongest-ever-pre-school-line-up/044712

[steptoes yard] 03/10/2016 20:12

Puts a floor under the price if nothing else

[melody9999] 03/10/2016 19:48

Suspect Crozier was fishing. Maybe thought the Canadian pension fund would wobble and consider cutting losses. Then he gets credit for striking a great deal. The rebuttal says something about future prospects for ETO.

So if I was Crozier would I come back and offer higher price????? Nope. Other fish in the pond and would be seen as weak.... if he did that, then his first approach could be considered as badly judged.

No harm done from our perspective except for the distraction.

[morph7] 03/10/2016 18:03

Can't see it with ITV to tell the truth. The premium price required to aquire eone wouldn't sit well with the ITV board ref future special dividends et al. Who knows, with so many suitors out there I hope we stay independent for the next 2 years at least especially with these upcoming figures in a few months. Not only is the company turning 'a cash flow corner' but we have a few extra % from fx as well. I'm still a tad annoyed that ITV distracted our board for a few days with such an irrational bid. It's not like we are in a great depression or something...

[raffles the gentleman thug] 03/10/2016 14:22

salpara111 ... i would just refer you to the Times article kindly posted by masureeguy on post 1788 which discusses the fact that ITV is not locked out from making another approach.

I would also refer you to the wording of their last RNS on the matter - "ITV continues to believe in the strategic logic and potential benefits of acquiring eOne ...."

In my own personal opinion I think if ITV does not up its game and start reinvesting its considerable cashflow it will find its own independence compromised.

[salpara111] 03/10/2016 14:12

I assume that as the company is listed in the UK it is subject to UK takeover code?
I guess if there was no "formal offer" tabled then you are correct in that they can come back again but I seriously doubt that an offer of around £3 would be well received by ITV shareholders and given that sentiment is rapidly changing where ETO is concerned I am guessing there are probably more investors who are now willing to ride this out.
Having said all of that.....they can have mine for £3!

[raffles the gentleman thug] 03/10/2016 13:49

I am afraid you are wrong on that salpara111 ... firstly ETO is a Canadian company and secondly ITV never actually made an offer, simply a proposal. So the whole thing was designed to circumvent the takeover code from the beginning and they can indeed come back whenever they wish.

Under Crozier ITV has a great record of making acquisitions, however these tend to be for a cheap price with promise of high performance based earn-outs. That strategy has served them well, but doesn't make sense for a company like ETO, which is a lot like ITV's own content business - in that its a conglomerate of smaller production companies meaning the individual company specific risk is lower in the first place.

But I agree ITV should have been more patient and engaged with ETO's own management and shareholders more.

[owenski] 03/10/2016 13:33

Trading update obviously well recieved

[salpara111] 03/10/2016 13:32

ITV cannot make another offer within 6 months unless a new bidder enters the fray.....takeover rules!
For all the kudos given to Crozier at ITV (of which I feel most is unmerited!) he completely stuffed up here.....he would have known very well that there was no possibility of the Canadian pension fund accepting an offer of less than £3 so why come in and start a process when it is clear that you are not willing to pay the asking price?
Happy to hold and see if it can climb back to the 275 area in the next few months.