Entertainment One

LN: ETO

£2212m market cap

445.2p last close

Entertainment One specialises in the development, acquisition, production, financing, distribution and sales of entertainment content. Its rights library is valued at US$2.0bn and is exploited across all media formats.

Investment summary

eOne’s FY18 results showed strong (21%) growth in underlying EBITDA. The Family & Brands division is benefiting from the higher margins from advertising and streaming video on demand (AVOD and SVOD), with underlying EBITDA up 28%. Film, TV & Music’s performance reflects the completion of the transition in film and the shift in mix toward TV, with an improvement in underlying EBITDA margin from 11.6% to 14.6%. The group has confirmed that Chief Content Officer Mark Gordon is staying with the group. It has also issued new senior secured loan notes for £425m due 2026, to redeem the previous £355m SLN 2022, saving an annualised interest cost of £8m (not yet incorporated into our forecasts).

Y/E Mar
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2018A 1029.0 163.6 124.2 19.3 23.1 4.2
2019A 941.2 197.6 160.0 25.0 17.8 4.9
2020E 1150.0 235.0 192.0 26.0 17.1 4.4
2021E 1250.0 260.5 214.2 27.3 16.3 3.2
Last updated on 25/07/2019
Industry outlook

SVOD is rapidly gaining share, growing at a reported 20% CAGR. Competition between platforms is driving the requirement for premium content and, despite the proliferation of non-linear distribution channels, there is still a tendency for the audiences to gravitate towards particular hits. This is driving a trend to high production values, with the real underlying competition to grab and maintain audience attention. eOne’s platform-agnostic stance allows it to take good advantage of the market vacillations.

Last updated on 25/07/2019
Sector
TMT
Share price graph
Balance sheet
Forecast net debt (£m) 641.8
Forecast gearing ratio (%) 83
Price performance
%
1m
3m
12m
Actual 13.2 (7.0) 22.7
Relative* 11.9 (7.5) 26.1
52-week high/low 483.4p/336.4p
*% relative to local index
Key management
Darren Throop CEO
Joe Sparacio CFO
Mitzi Reaugh Non-executive director

Content on Entertainment One