eOne profits plunge as TV investment ramps up

Entertainment One has seen its half-year profits slide 80% as the international studio reported a significant increase in spending on content and production.

eOne CEO Darren Throop

Profits before tax at the London-listed company were £3.7 million (US$4.6 million) for the six months to September 2016, down significantly on the £18.1 million posted in 2015.

This was to due to “higher net finance charges primarily reflecting higher average debt levels period-on-period to finance acquisitions”, and interest rates related to a December 2015 debt refinancing agreement.

The news comes soon after ITV’s failed £1 billion takeover of eOne, and came simultaneously with the news long-serving CFO Giles Willits was stepping down, with former IMAX financial chief Joe Paracio taking over in the interim.

eOne claimed underlying EBITDA (which doesn’t include costs related to various company acquisitions) of £38 million – down from £52 million last year – was “in line with plans for the first half of the financial year and on track to deliver full year financial performance in line with management expectations”.

Revenues grew 19% from £337.1 million last year to £401 million in the period, with net cash from operating activities growing from £90.4 million to £132.9 million.

This helped to support an 89% upswing in content and production investment, with this metric up from £104.9 million in 2015 to £198.4 million.

The eOne Family division “excellent growth driven by the continuing strong performance of Peppa Pig”, with revenues up 16% at £37.9 million, while the television division saw underlying EBITDA was of £7.9 million.

US drama house The Mark Gordon Company (Designated Survivor) was singled out as a profit centre, with revenues up 258% to £28.3 million. Profit at the LA-based firm was also up 15%.

Overall revenues at the TV division were £97.7 million, up 20% on the £81.6 million posted in 2015. A 21% increase in production costs was in part offset by a 22% drop in acquired content.