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Canadian producer and distributor Entertainment One on Tuesday reported its financials for the first half of its fiscal year that ended on Sept. 30, saying it was on track to meet its full-year targets after posting a lower first-half pre-tax profit on higher overall revenues.
eOne CEO Darren Throop during a presentation to analysts in London, England also addressed whether U.S. President-elect Donald Trump’s possible impact on the entertainment industry will disrupt his own film and TV production and distribution business. “I don’t think (Donald) Trump will change anything dramatically that will impact our business,” he answered.
As to political instability in other territories in which eOne operates, including the UK now dealing with Brexit fall-out, Throop pointed to the entertainment industry benefiting from escapism by consumers. “It just seems to gravitate people more to content than at any other time. So we don’t really see any impact at this time,” he told analysts.
“It’s business as usual. I don’t see any Trump issues at this point, except we’re quickly trying to build a wall in Canada,” Toronto-based Throop then joked to analysts, before adding: “Sorry Mr Trump. I’m sure he’s not watching.”
eOne also said Tuesday that CFO Giles Willits has stepped down after 10 years, with Joe Sparacio named interim CFO.
The Canadian company posted a first-half pre-tax profit of $29.9 million (£24.0 million), compared with a year-ago profit of £39.9 million on an adjusted basis, down 39.8 percent. Underlying earnings before interest, taxes, depreciation and amortization hit $47.4 million (£38 million), down 27 percent from £52 million in the year-ago period. The company said that was “driven by the timing of increased theatrical investment in the very strong first-half film slate, which will drive second-half performance.”
First-half revenue rose 19 percent to $500.2 million (£401.0 million) from 337.1 million pounds in the year-ago period. The company said it had a “strong start to the financial year,” with a “well-developed television pipeline and film slate in place to deliver full-year financial performance in line with management expectations.”
Shares in eOne closed Tuesday on the London Stock Exchange down 31 pence, or nearly 13 percent, at 214 pence.
“We are pleased to be able to report revenue growth across all divisions during the period,” said CEO Throop in a statement. “The group’s strategy to invest in content continues to bear fruit, and the entertainment market’s focus on quality content plays to Entertainment One’s strengths, ensuring that the group is ideally positioned for the future. Whilst theatrical investment has impacted profitability in the period, we will see the financial benefits of this investment delivered in the second half of the financial year.”
He added: “The period ahead is an exciting one. The television business has 86 percent of its full-year revenues already delivered, contracted, or commissioned, the family business is underpinned by exceptional performance from Peppa Pig with PJ Masks showing strong potential, and the film division is set to benefit from both the second half’s strong slate and the home entertainment window for films, including The BFG and The Girl on the Train.”
Film unit revenue increased 9 percent, driven by an 87 percent gain in theatrical revenue that outweighed a 26 percent home entertainment drop, with underlying bottom-line results swinging to a loss of $2.9 million (2.3 million pounds). The company cited “the timing of high-profile theatrical releases in the first half of the year.”
Theatrical releases this fiscal year from eOne itself or films distributed by eOne included The BFG, Now You See Me 2, Bad Moms, Eye in the Sky and Woody Allen’s Cafe Society. The year-ago period included The Water Diviner, Insidious: Chapter 3, Mr. Holmes, Southpaw and The Divergent Series: Insurgent.
The company added: “The slate remains strong and diverse for the second half and includes The Girl on the Train, based on the best-selling novel, which opened in the U.K. and several other territories in the first week of October and has to date generated over £23 million ($28.7 million) at the U.K. box office, Office Christmas Party, the third title from the 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, critically acclaimed I, Daniel Blake, which won the Palme d’Or at this year’s Cannes Film Festival, the comedy sequel Bad Santa 2 and the sci-fi drama Arrival, eOne’s third number one opening of the year, starring Amy Adams.”
In its TV business, Entertainment One had success with Private Eyes and the first episodes of season 5 of Saving Hope, as well as the Mark Gordon Company’s delivery of the first three episodes of Designated Survivor during the period. TV revenue for the first half rose 34 percent, with underlying earnings before interest, taxes, depreciation and amortization up 18 percent.
U.K. TV giant ITV in late August withdrew a takeover offer for Entertainment One, which had rejected a $1.3 billion bid earlier in the month.
Etan Vlessing contributed to this report from Toronto.
Nov. 22, 2016. 12:00 noon. Updated with comments by Entertainment One CEO Darren Throop during an analyst presentation in London, England.
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