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August 22, toy giant Hasbro announced £3.3 billion
  (about 28.6 billion yuan)
  Cash acquisition of “Pig Pig” parent company Entertainment One (hereinafter referred to as eOne).

Entertainment One is an entertainment company based in Toronto, Canada, listed in London.
  The company’s business involves the production and distribution of television, movies, music, and other content.

After the acquisition, Hasbro will have well-known IPs such as “Little Pig Pecs” and “Pajama Heroes”.
  It also enhances Hasbro’s ability to produce and distribute media content.
  In general, this is a strong alliance and mutual acquisition.

“Acquisition With eOne, we will receive a globally recognized family brand that will provide a strong operational return and brand creation channel for Hasbro’s portfolio.
  Brian Goldner, Chairman and CEO of Hasbro, said, “In addition, Hasbro will leverage eOne’s immersive entertainment capabilities to bring our brands, which are loved by gamers, fans and family audiences, to the world and realize our IP economy. blueprint.
 

After the toy business was hit by the collapse of Toys R Us, Hasbro has been working hard to find the company’s next growth point. Film and video content and games are important development directions for the company.

Hasbro’s first quarter of FY 2019 was able to turn a profit, largely thanks to revenue growth in the entertainment, licensing and digital sectors, and they were the only ones that Hasbro had maintained during the major industry earthquake last year. The department of growth.

Hasbro has developed two successful IPs, “Rainbow Pony” and “Transformers” through film and television content. The acquisition of eOne can enhance Hasbro’s IP reserves and at the same time obtain its many years of film production and distribution. Resources.

It is worth noting that at present half of eOne’s profits come from two IPs: “Little Pig Peggy” and “Pajama Little Hero”.
  “Little Pig Page” has been in existence for 15 years. According to eOne’s financial report, in the fiscal year 2019 (as of March 31 this year), “Little Pig Page” has generated 90.2 million pounds (about 110 million US dollars) in revenue. , an increase of 20% over the previous year.

For eOne, the development of consumer products such as IP derivatives has been their weakness, and their ability will be complemented after the acquisition.
  At the same time, Hasbro can also use the eOne to further penetrate the Canadian market.

“Hasbro’s business covers toys, games and consumer products, which will further advance our achievements at eOne,” said eOne CEO Darren Throop. “The eOne team will do what they do best, while still Can get Hasbro support in IP and merchandise.
  In addition, after the acquisition, Hasbro’s influence in Canada will be enhanced, and world-class talent and production forces will join Hasbro.
 

However, after Hasbro acquired eOne, it is uncertain whether they will retain the content of adult production in the future.
  Currently, eOne is also producing Trailer Park Boys and Growing Up Hip Hop: New York for Netflix and We TV.

Before Hasbro reached an agreement with Paramount in 2017 to produce film and television content. At the call after the completion of the acquisition, executives suggested that the cooperation will continue.

In terms of trading details, Hasbro acquired it at a price of 5.6 pounds per share (about 6.8 US dollars), which is 31% higher than the average price of eOne in the past 30 days.
  For this acquisition, Hasbro has raised some cash through debt financing and equity financing, with cash from equity financing ranging from $1 billion to $1.25 billion.
  Bank of America Merrill Lynch will provide a bridge loan for the acquisition.

According to the joint statement of both parties, eOne executives will join the Hasbro management team.
  At the same time, the transaction will continue to ensure that eOne meets Canadian regulatory requirements for TV movies.

EOne’s video business has encountered bottlenecks

Eone is willing to sell to Hasbro, in addition to complementary business, one important reason is that its own film and television music sector has encountered bottlenecks.

eOne released its annual earnings report for the year ended March 31, 2019 in May.
  The financial report shows that the fiscal year 2019 (April 1, 2018 to March 31, 2019)), eOne’s revenue was 941 million pounds, down 9% from the previous fiscal year’s 1.03 billion pounds.

There is a profit falling along with revenue.
  Operating profit decreased from approximately 101 million pounds in the previous fiscal year to 70.7 million pounds, and net profit fell from 68.8 million pounds to 15.3 million pounds.

From the financial report, part of the decline in profits was due to the increase in management fees, but the film and television music sector accounted for 80% of revenue, and its decline dragged down overall performance.

In fiscal year 2019, the film and television music department’s revenue was 789 million pounds, down 13% from the previous year’s 911 million pounds. The most serious decline in trading income, down 49% to 67.6 million pounds, the revenue of the broadcast licensing business also Reduced by 15% to 381 million pounds.

income decline This is because the number of film releases of the company has decreased this year, the home entertainment market has declined, and there have been problems with the series.

Most of eOne’s participation is in the investment and distribution of small-cost movies, such as the Green Book.
  The company attributed the decline in the number of issues to the company’s strategy of focusing on a few high-quality films.
  However, judging from the situation of the film market in recent years, the survival of small-cost movies has become more and more difficult due to the impact of streaming media.

The so-called home entertainment is mainly DVDs that sell movies and TV shows.
  In the fiscal year of 2019, eOne released a total of 160 DVDs for film and television programs, a decrease of 37% from 255 in the previous year. This market is also greatly affected by the media.

eOne owns the overseas distribution rights of “The Walking Dead” and its derivative drama “The Fear of the Dead”. The broadcast licensing business of the released series accounts for a large part of the film and television music business.
  The decline in revenue from the broadcast licensing business is related to the play of the Designated Survivors.
  The play was cancelled by ABC last year, and Netflix took over, but only 10 episodes in the third quarter, half of the 22 episodes aired last year.

However, eOne’s family and brand department is still performing strongly with the help of “Pig Peggy” and “Pajama Little Heroes”.

The family and brand sector revenues rose 28% from last year’s approximately 124 million pounds to approximately 159 million pounds.
  Among them, the broadcast license revenue increased by 144% to 30.5 million pounds.Trading income increased 24% to 32.2 million pounds.
  Revenue from the consumer goods licensing business, which accounted for more than half of revenue, also achieved a 13% increase to £89.4 million.

” small Pig Page’s revenue for eOne in FY 2019 was £90.2 million, a 20% increase from the previous year.
  Revenue growth came from orders from Chinese streaming media, and Mango TV, Youku, iQiyi and Tencent video all signed the piglet.

The revenue of “Pajamas” has reached 59.5 million pounds, a 39% increase from the previous year.
  Moreover, he will also enter the Chinese market this year.

Derivatives On the other hand, sales of derivatives of “Pigpe” increased by 4% to $1.35 billion.
  Sales of “Pajamas Little Heroes” rose 10% to $1.15 billion.
  Compared with their revenue growth, the sales of derivatives are not growing fast.
  In fact, throughout the 2019 fiscal year, eOne’s authorized derivatives sales were in a bottleneck.

According to earnings, in the fiscal year 2019, eOne authorized derivatives sales reached $2.52 billion, up 6% from the previous year.
  More than 1,600 authorized contracts were signed, an increase of 6% over the previous year.
  The slow growth rate was mainly due to the impact of the closure of Toys R Us, and shipments in the Chinese market were not as expected.

Product authorization is a big revenue. After selling more licenses for film and television content, derivatives are a sustainable long tail market.
  After being acquired by Hasbro, eOne can use the Hasbro channel to achieve synergy and solve the problem of slow sales growth.

Hasbro’s entertainment and licensing business continues to grow, acquiring eOne can help him in one step

Hasbro’s second-quarter earnings report showed that the company’s revenue rose 9% from the same period last year to $9.8 billion.
  However, net profit fell 78% to $13.43 million. The decline in net profit was mainly due to the company’s expenditure on pensions.
  Overall, Hasbro’s second-quarter performance exceeded Wall Street expectations.

Look at the specific business unit.
  A new department has been added to this quarterly financial report.The Global Operations Department, which is responsible for purchasing finished products for the US and Canadian departments and international departments that sell toys, because we do not involve specific business, we skip here.

United States and The Canadian division performed well in the second quarter, with revenues up 14% from the same period last year to $510 million.
  At the same time, operating profit surged 46% from last year’s $73.1 million to $107 million.

The increase in revenue was mainly attributable to the strong performance of several IP-shifted movies this summer, and Hasbro’s toys and other derivatives were sold well.
  My own IP “Magic” and “Transformers” have also made great contributions.
  The increase in profits is due to a decrease in its administrative expenses.

International Department Continued to shrink in the last quarter, revenue decreased by 1% compared with the same period last year, to 377 million US dollars, but successfully turned profitable, and gained a profit of 14.6 million US dollars.
  The international division lost $30.41 million in the last quarter.

The decline in revenue of the international sector was mainly due to the exchange rate issue. If the exchange rate is affected, revenue will increase by 17.1 million US dollars.
  The reason for the successful profitability is the decline in product mix and promotion costs.

Among the major business units, the growth is still in the entertainment, licensing and digital sectors. Revenue increased by 28% year-on-year and 5% quarter-on-quarter to US$96.51 million.
  The growth of the department is still driven by the game, the PC version of Magic Card Games “Magic:
  Arena has made the biggest contribution to the growth of the quarter.

But the operating profit has fallen, from $21.8 million last year to $7.9 million. The decline was due to the production of finished products and rising advertising, development and management costs.

When watching games alone (including board games and video games sold as toys), the game generated $393 million in revenue for Hasbro this quarter, close to 40% of total revenue, the last 10 The highest point since the quarter.

However, the real stand The media content upstream of the IP industry chain was overshadowed by the game’s glory, which is the main reason why Hasbro decided to acquire eOne.
  At present, Hasbro’s more well-known content products are only the cartoons “Rainbow Pony” and “Transformers” series of movies, and now Hasbro needs to build its next “explosion” content.

And eOne is able to provide a professional content production team, and also has a large number of overseas distribution channels, which can cover the already weak European market of Hasbro, which is essential for creating “explosive models”. condition.

The transformation needs of Hasbro are very urgent.
  Because, as consumers spend more time on TV and mobile screens, the toy business may face an impact.

from the brand From a point of view, the core brand with Hasbro’s core IP is growing rapidly (14%), and about $577 million in revenue also accounts for more than half of total revenue.
  The revenue of emerging brands is only 70.95 million, but the growth rate of 28% is very strong.

Cooperative brand revenues rose slightly by 3% this quarter to $213 million, and the reason for the increase was related to Disney’s many blockbusters released in the summer.
  The reason why it did not rise much was because the movies last summer were also very dense.

Game brand revenues fell 8%, mainly due to poor performance of several board games such as PIE FACE and DUEL MASTERS.
  However, it should be noted that Hasbro’s signature games “Magic” and “Monopoly” are not listed here, but are classified as core brands.

(Note: The exchange rate conversion in the text is based on the exchange rate of 1 renminbi = 0.1154 pounds on August 23, 22