A trading update reveals Entertainment One (ETO) is on track to hit expectations for the year to 31 March as it enjoys a strong contribution from its Family and TV divisions.
This makes up for a 37% decline in box office revenues from its Film division which released significantly fewer titles during the period.
The Family arm, which encompasses popular kids’ TV shows like PJ Masks and Peppa Pig, is the jewel in the crown, posting a 50% increase in revenue.
AJ Bell investment director Russ Mould points out the reliance on Peppa Pig is something for investors to consider.
‘The Peppa Pig children's series remains a big driver for the company as it performs well in mature markets like the UK and Australia and expands in newer geographies like China and Japan.
‘Being too closely tied to one blockbuster franchise is a risk though, as investors in Harry Potter publisher Bloomsbury could attest. Bloomsbury traded close to £4 when Pottermania was at its height in the mid-noughties but now changes hands for just 176p.’
Elsewhere the company says year end net debt is expected to be below two times underlying earnings following the acquisition of the remaining stake of The Mark Gordon Company – the production studio of high profile producer Mark Gordon.
Gordon is now president and chief content officer of the group. The Film business is being retooled, with costs taken out, a focus on creative partnerships with ‘the industry’s highest quality film-makers’ and increasing emphasis on in-house content production.