Hasbro blames eOne revenue drop on US strikes, Lionsgate sale to wrap ‘end of year’

Yellowjackets

Hasbro has revealed plunging revenues at soon-to-be sold Entertainment One (eOne) as a result of the US writers and actors strikes, while also confirming the division’s sale to Lionsgate will be wrapped by the end of 2023.

After months of searching for a buyer, the toy giant revealed in August it had struck a deal to sell the Yellowjackets firm to Lionsgate for $500m, handing it control of a 6,500-hour content library including shows such as Grey’s Anatomy and Criminal Minds but not Peppa Pig and My Little Pony.

Peppa Pig

The sale of the division has not come in time to avoid the impact of the US strikes, however, and unveiling its Q3 results yesterday, Hasbro said revenues from its entertainment arm fell 42% to $122.9m across the three months, down from $211m a year ago.

It added that a revenue decline of 25-30% is expected across 2023 as result of delayed deliveries caused by the strikes, with SAG-AFTRA still in negotiations with production groups via the AMPTP.

‘Refocusing on Hasbro’s core mission’

eOne was put up for sale by toy manufacturer Hasbro last year, just three years after it acquired the TV and film company for $4bn, with Lionsgate long-mooted as a potential suitor.

The deal means Hasbro will retain rights to IP including Peppa Pig, which it highlighted as being a key driver for the firm.

The company added that revenue from eOne’s film and TV assets to be sold to Lionsgate had brought in around $400m so far this year, down around 20% on 2022.

The company’s entertainment division loss of $801m included a $473m charge connected to the eOne sale.

Hasbro CEO Chris Cocks said the sale of eOne’s “continues to be on track for an end of year close” and “will simplify our operating model and refocus Hasbro on our core mission.”

Barbie

He continued: “Moving forward, our entertainment efforts will be franchise led and asset light, focused on driving toy and game sales, with support from world class content partners.”

Cocks highlighted that Hasbro has more than 30 projects in development, ranging from Netflix animation Magic: The Gathering and Transformers One for Paramount.

Hasbro’s overall revenue came in 10% down on last year at $1.5bn, with 2022’s profit of $194m falling to a loss of $170m this year.

The toy giant also said that it expected its overall annual revenue could fall by up to 15%, up from a previously mooted maximum of 6%, as a result of falling consumer sales. Its share slumped 12% in after-hours trading on the news.

Mattel, which saw its Barbie brand receive unprecedented exposure following the hit Margot Robbie-starring movie, said yesterday that it expects a weaker end of the year as consumer finances tighten. Its shares were down around 8% on Thursday as a result.