Entertainment One Share Discussion Threads

[salpara111] 30/9/2016 09:39

The reason I have held is that I do believe that they are doing the right thing.
Taking operational control of Peppa so they could leverage their global distribution network was critical to releasing pent up value....etc HOWEVER the way they went about doing it with a massively discounted rights issue was clearly not the right course of action.
I am also surprised that they did not issue a proper rebuttal to what would possibly have been a bid at around the 255p level, they had plenty of time to put one together before todays statement.

[raffles the gentleman thug] 30/9/2016 09:29

I understand your point Salpara. I fortunately have only been a shareholder for a few months, so did not suffer losses last year. However looking back at historic earnings its completely clear that the price investors were paying for this business a year ago was just completely nuts - the multiple decompression has been huge. One can hardly blame the company for taking advantage of this to grow the business, and in retrospect the acquisitions they have been have proved to be inspired and cheap. So I do believe one has to to look at it in a fresh light and that I believe is aided by the management making it abundantly clear the growth will now almost all come internally rather than through acquisition.

Re your comments on valuation of content library I completely agree and posted on this last month. It has indeed been difficult to reconcile the return they are making on the film library with its claimed valuation. However I think we are on the cusp of earnings growth coming thru to substantiate its valuation.

[salpara111] 30/9/2016 09:16

I would not argue with your statement HOWEVER management have shown themselves to not care about shareholder value but rather have pursued top line growth at the expense of real cash profits, their ham fisted fund raisings last year caused long term investors like myself to be currently holding losing positions.
A bid of around 255 which I think was achievable would have allowed me to exit for a modest profit so you can understand my frustration.
Clearly if you bought in the last 6 months you would view your situation somewhat differently!
I also struggle to accept their library valuation in that I would have thought that they should be able to achieve a 5% yield on it which would mean clean profits of at least $75M from that alone but it is pretty clear that they don't generate anywhere near that level return so again I would suggest that they package and sell some non core elements of the film library as that would at least put a real tangible value on it.

[raffles the gentleman thug] 30/9/2016 08:43

I don't get that salpara111 ... I invest predominantly in growth companies and am desperate to find names such as this with billion dollar market caps in which you can find liquidity.

This is still a comparatively young company, growing like a weed, and I have faith that the earnings growth profile will ultimately be reflected in the share price development of this business. Obviously they need to demonstrate the need for this business to internally finance itself through free cash generation, but that will come in abundance when the growth profile eventually subsides.

[salpara111] 30/9/2016 08:32

I guess my main disappointment is that they did not suggest that they would look at a US listing as that would appear to be the only thing that would help close the valuation gap in the near term.
I will continue to hold but my hold is now weaker than it was and if I did see another opportunity I would be inclined to sell part of my holding as it would seem that any share price appreciation is going to be hard won.

[rogerbridge] 30/9/2016 08:25

Good to know all is on track. Huge increase in valuation of content library.
Board were correct to rebuff the ITV bid, some short termers could sell as it is apparent the board will not sell out on the cheap.

[raffles the gentleman thug] 30/9/2016 08:23

But I think its crystal clear why they didn't accept it werty5 - when you have eOne Television growing at a compound rate of 24% over the past 5 years and showing no sign of decelerating; and Family growing at a compound growth rate of 42% over the same period, its blindingly obvious to the meanest of intellect that selling the business on a multiple of just 11x to 12x earnings was ridiculous and I defy anyone to match that growth at that price in this industry - ITV wouldn't sell its own content business at that price so why should eOne.

[1gw] 30/9/2016 08:18

salpara111 - I would agree that a partial sale to benchmark the valuation would be an interesting idea, whatever they do with proceeds raised. The problem for me with "independent" assessments, whether they are for content as in this case or in a completely different sector such as oil and gas field reserves is that they are often greeted with scepticism by investors. The suspicion is that the valuer has a vested interest in being relatively optimistic so as to win more valuation business in future.

So a partial sale of some of the film library for example, where they could then come out and say they achieved an x% premium/discount to the independent valuation would provide a benchmark for the rest of the valuation. Of course the valuation may not be granular enough to allow them to do this but I would hope they are at least looking at the possibility.

[spoole5] 30/9/2016 08:17

Nothing here to indicate that without a takeover this is going nowhere.

[werty5] 30/9/2016 08:14

Agree the update is ok and probably is what everyone who is invested here was expecting but would have been nice to have a little bit of detail from the bod in words about why they turned down the itv offer etc.... I understand that it would only be putting fluff on a otherwise good update but sometimes you need to sell yourself.

[raffles the gentleman thug] 30/9/2016 08:11

Only thing I would add is that is that the value of the content library certainly exceeded, by some degree, my own expectations of around $1.3bn. This effectively means the earnings capacity the content library is delivering, must also be higher than expectations which bodes well for the results when released.

You simply can't find another company in the UK delivering the growth they are delivering for a valuation of just 11x earnings, so I remain quite happy and am inclined to buy more at these cheap levels.

[salpara111] 30/9/2016 08:10

I have to say that I too am a little disappointed that it was not more bullish considering the share price is well below what most people, including myself, considered to be a seriously low ball offer from ITV.
No share price reaction at all is hardly positive.

If the film library is really worth more than the market cap then there is a serious argument for selling at least part of it and returning the cash to shareholders as a special divi.

[rivaldo] 30/9/2016 07:53

That's an excellent update. The core divisions are all thriving once more, and the content library is up 50%!

Interesting that the m/cap is now £911m (per the thread header) whilst the content library alone is worth over £1.1 billion....

Very positive outlook for H2 as well - always scope for an upgrade now that we know ETO should be at least in line.

Hopefully a decent rise is in store from here.

[1gw] 30/9/2016 07:53

I'm happy with that. Although the headline is "in line", the detail of the update reads very positively, which perhaps does just go to make raffles' point about expectations being pretty high.

[tini5] 30/9/2016 07:28

Trading update with new valuation of the content library shows they were spot on with not accepting ITV's offer. Don't forget Peppa Pig is taking off in China; that's huge potential.

eOne are getting on with business and getting it done.

[werty5] 30/9/2016 07:22

Good to see content now valued at 1.5 billion however. That is a huge increase.

[raffles the gentleman thug] 30/9/2016 07:22

In line with expectations is merely saying they are on track to continue the 24% CAGR rate of organic growt they have enjoyed for the past five years - nothing wrong with that. Frankly if anyone disappointed by that then they shouldn't have been in it in the first place ...

[werty5] 30/9/2016 07:17

Update was ok but a bit dull must admit I was hoping that eone would bang the drum a bit more.

[masurenguy] 30/9/2016 07:13

Very positive HI performance. Film division - a weaker performer last year - is up 55%. Independent Content Library valuation of £1,150m compared to market cap of £915m.

30 September 2016
Entertainment One Ltd.

Trading Update

Entertainment One Ltd. provides the following trading update on the Group's performance as it completes the six month period ended 30 September 2016.

Summary

· Operating performance to-date on track across all Divisions, with a strong committed film and television slate underpinning the second half of the financial year

· The Group anticipates full year financial performance will be in line with management expectations

· Independent library valuation increased to US$1.5 billion (2015: US$1 billion)

Operating Performance

Television

eOne Television is on track to grow the business with the production/acquisition of around 1,100 half hours of content in the full year. In Production, new commissions include serialised crime drama Cardinal and hostage show Ransom, whilst both Private Eyes and You Me Her have been re-ordered for second seasons. A strong second half pipeline includes new shows Mary Kills People and Ice and renewals Rogue 4 and Saving Hope 5. The non-scripted business is already benefiting from Renegade 83's new season of Naked and Afraid and has a strong pipeline in the second half. The International Sales business is on track for a record year with new seasons of Fear The Walking Dead, Halt and Catch Fire and Turn as well as a growing number of deals and buyers for eOne-produced shows. The second half will also include sales of newly commissioned comedy Foreign Bodies.

The Mark Gordon Company has started delivery of Designated Survivor, the first series under its new independent studio model. The show premiered as ABC's strongest scripted telecast in its time slot in four years securing 45% more viewers than its closest time slot competitor, and totalled over 15 million viewers for its Live+3 ratings (Adults 18-49)[1]. International sales for the show, which are handled by eOne, have been very strong and a worldwide streaming rights deal excluding North America has recently been announced with Netflix. Production is also under way on Conviction, distributed internationally by eOne, and the show premieres on ABC on 3 October 2016.

In addition, The Mark Gordon Company currently has five additional renewed series airing on both US network and premium cable, including Grey's Anatomy, Criminal Minds, Criminal Minds: Beyond Borders, Quantico and Ray Donovan. The Mark Gordon Company has commenced principal photography on The Nutcracker and the Four Realms for Disney and is in pre-production on Molly's Game, written and to be directed by Aaron Sorkin and starring Jessica Chastain and Idris Elba. Molly's Game is being distributed internationally by eOne and in the US by STX Entertainment.

Family

The Family Division has seen growth for Peppa Pig progress in line with management plans as the brand continues to roll out in international territories. In the US, the Division has seen even stronger than expected demand for Peppa Pig merchandise across a number of product categories. In China, the show has now surpassed 6 billion views on local on-demand platforms iQIYI, Youku and Tudou since launching in October 2015 and it is also one of the most popular programmes for pre-schoolers on state television broadcaster CCTV. Major Chinese online retailers, Jing Dong and Tmall, have launched a wide range of Peppa Pig merchandise on their popular online shopping sites and merchandise is also available at Toys "R" Us stores nationwide. Delivery of the new series of Peppa Pig has commenced with a total of 52 new episodes being delivered between now and late 2017. The first new episode airs in the autumn in the UK and the US.

PJ Masks continues to deliver strong audience figures in the US and in a number of international territories including the UK, France, Italy, Spain and Australia. The first series will continue to roll out on Disney Junior channels around the world throughout 2016 and 2017, and a second series has been greenlit for delivery from autumn 2018. The US merchandising programme will launch in October 2016 with product exclusively available at Toys "R" Us, then moving to further retailers in early 2017.

Film

The Film Division has released a series of higher profile titles in the first half delivering increased period-on-period box office totals of US$151 million to-date (2015: US$97 million). The Group expects to release 85 theatrical titles in the first half (2015: 96 releases).

Significant releases in the period included The BFG, which grossed £30 million at the UK box office, Now You See Me 2, Bad Moms and Woody Allen's Café Society. The slate for the second half includes The Girl on the Train, based on the best-selling novel, which opens in the UK and several other territories in the first week of October, Office Christmas Party, the third title from our partnership with Amblin Partners, and Lion, A Monster Calls and La La Land, which all premiered to wide acclaim at the Toronto International Film Festival, with La La Land going on to win the top prize at the festival, the People's Choice Award.

Management continues to focus on delivering cost efficiency opportunities to improve profitability in the Film Division and is on track to deliver its annual £10 million cost saving target from FY18.

Outlook

The outlook for underlying financial performance for the full year continues to be in line with management expectations.

Corporate

The Group's annual independent library valuation has been completed, including all of eOne's television, family, film and music assets. As at 31 March 2016 the overall value of the Group's content library had increased to US$1.5 billion (2015: US$1 billion) primarily driven by strong performance from the Group's Family properties and the acquisition of an additional 35% interest in Peppa Pig. During the period, following its initial investment in 2014, the Group completed the purchase of the remaining 50% stake in leading digital studio Secret Location, which results in full ongoing ownership by the Group.

The Company's Annual General and Special Meeting takes place at the Company's Toronto offices at 10:30am EST/3:30pm BST today. Results for the six months ended 30 September 2016 will be announced on 22 November 2016.

[masurenguy] 29/9/2016 08:33

Good spot Riv. I particularly liked the statement:
"The initial episode of the series delivered an average audience share of 29% among children ages 2-5, and secured a top five slot for preschool programming during its first week on air. Year to date, over 50% of all adults 18-49 watch PJ Masks with kids ages 2-8. On average each quarter, PJ Masks reaches more than 40 million total viewers across the U.S."

It looks like a good second string to PP with plenty of further mileage over the next few years!

[raffles the gentleman thug] 29/9/2016 08:33

The bright spot for ABC was the new Kiefer Sutherland drama Designated Survivor. After a solid but not remarkable Live+SD debut given the lofty expectations (2.2 in 18-49, 10 million), the Wednesday 10 PM drama excelled in time-shifted viewing, adding 5.3 million viewers in Live+3, the largest gain for any series this season and biggest since the debut of ABC’s How To Get Away With Murder in September 2014. In adults 18-49, Designated Survivor gained 1.5 rating in the first three days of playback, the biggest for a new series this season and tied with Fox’s mega hit Empire as the biggest gain for any new TV series debut in two years, since ABC’s HTGAWM (+1.9 on 9/25/15).

[rivaldo] 29/9/2016 08:23

PJ Masks set to take over the USA for Christmas with more products - this really could be Peppa Mark 2:



"eOne Suits Up with More U.S. Partners for TeamTO’s ‘PJ Masks’

Expansive new range of consumer products across multiple categories set to debut in the U.S. beginning Fall 2016.

By AWN Staff Editor | Wednesday, September 28, 2016 at 2:24pm

NEW YORK -- Entertainment One is expanding its consumer products offerings for its newest hit series, PJ Masks, which airs on Disney Channel and Disney Junior the Channel in the U.S. Among the many new licensees developing products is Happy Threads as apparel partner. Happy Threads joins master toy licensee Just Play and master publishing partner Simon & Schuster Children’s Publishing in supporting the popular brand. The new PJ Masks products will make their U.S. retail debut beginning this fall.

“PJ Masks has been a huge hit with kids and families throughout the country and we’re very excited to expand our merchandise program with such a wide range of offerings across multiple categories,” remarked Joan Grasso, VP licensing -- North America, eOne Family. “Our newest partners will create a host of imaginative products that will enable PJ Masks fans to fully immerse themselves in all the fun and adventure of the action-packed series.”

Happy Threads will develop a full range of fashions featuring the trio of pajama-sporting preschool superheroes -- Catboy, Gekko and Owlette. Other newly-named soft lines licensees for PJ Masks include:
•Accessory Innovations (backpacks, lunch totes, wallets and assorted bags)
•AME (sleepwear)
•Disguise (Halloween costumes and holiday-themed accessories)

In addition, eOne also has secured new partners for toys, arts & crafts, party goods, and more, including:
•Amscan (party goods, paper and plastic tableware and decorations)
•Crayola (coloring and activity products)
•Cra-Z-Art (arts & crafts activity sets and accessories)
•Jakks Pacific (ride-ons, wagons, inflatable environments, outdoor seasonal and kid’s furniture)
•Phoenix International (electronic sound books)
•Skyhigh International (back-to-school stationery sets, writing and activity sets)

PJ Masks became an instant hit with TV viewers nationwide upon its U.S. premiere in September 2015. Its first episode attracted 1.6 million unique viewers across its Disney Channel and Disney Junior the Channel premieres. The initial episode of the series delivered an average audience share of 29% among children ages 2-5, and secured a top five slot for preschool programming during its first week on air. Year to date, over 50% of all adults 18-49 watch PJ Masks with kids ages 2-8. On average each quarter, PJ Masks reaches more than 40 million total viewers across the U.S., including nearly 12 million kids ages 2-5 and more than 16 million adults ages 18-49. Year to date PJ Masks ranks among the Top 10 preschool series in total viewers (1.6 million) and among kids ages 2-5."

[1gw] 29/9/2016 08:09

Big day tomorrow, then, hopefully. I must say I am pretty optimistic and really hope they set out to show in both "current trading" and "outlook" sections of the statement why they were right to be so dismissive of the ITV approach.

[raffles the gentleman thug] 26/9/2016 19:52

Totally appreciate that Napoleon - alls I would say is that the management were at pains to point out at time of last results that they were now in the organic internal growth phase rather than acquisition led growth, and believe they are acutely aware of the need to demonstrate some cash conversion to investors. But it is a pretty complex company and the market is still struggling to come to terms with the difference between group debt and non recourse production financing, which is akin to working cap, and hence trust the cash generation they have already shown last year.