Entertainment One is a Canadian media distribution company. Based in Toronto, Ontario, the Company is primarily involved in the acquisition, distribution, and production of entertainment content, including films, television series, and music. It is listed on the London Stock Exchange.
The Company gained around 5 Percent in the first six months of the year, however, the share shot up over 40% following a takeover bid by ITV Plc. The share price currently trades at 236 pence per share which is in line with the offer from ITV Plc.
Entertainment One (ETO) is known for the popular cartoon character ‘Peppa Pig’ and the TV series ‘The Walking Dead’. The offer is in line with ITV’s strategy to continue diversifying its offering. ITV itself is rumoured as a takeover target and the attempt to purchase ETO is seen as an effort to remain independent.
The ‘Peppa Pig’ franchise on its own would bring more than $1 billion in worldwide retail sales. The first series of 52 five-minute episodes started on 31 May 2004 and continues to be one of Nick Jr’s most popular programmes.
In the United Kingdom ‘Peppa Pig’ is so popular that Nick Jr. too has been rebranded to Nick Jr. Peppa when airing month long-marathons of the series. ‘Peppa Pig’ has won several Children’s Awards.
The deal would also add to ITV’s potential growth. Currently ITV is trading on a PE of 10.2x earnings, which is one of the lowest in the industry. Advertisement revenues may be come under pressure from the difficult economic scenario. However, organic growth and growth from M&A should provide sufficient revenue growth. A solid balance sheet also supports continued growth in dividends.
This article was issued by Antoine Briffa, Investment Manager at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice.
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