The wave of acquisition speculation that has engulfed Twenty First Century Fox highlights the value in original television and film production. According to reports, Comcast, Verizon, Disney and Sony have all attempted to get their hands on the Murdoch-family-owned media conglomerate amid rising competition in the TV market. UK-listed Entertainment One (ETO) has felt the benefits of the media merger frenzy – its shares are up 38 per cent since July.
But chief executive Darren Throop thinks the group – a one-time quarry of ITV (ITV) – is doing just fine on its own. There is “still significant value to be gained”, he said, following the release of half-year results that sent shares to their highest level since July 2015.
The television and family divisions reported double-digit revenue growth, which helped offset a 29 per cent decline in film (the latter struggled against a tough comparative period that included the release of several blockbuster titles). Meanwhile, substantial cost savings helped spark a 36 per cent increase in underlying cash profits to £51.4m. Management expects £10m of savings in the year to March 2018 as the group transitions from physical to digital distribution. Therefore, broker Numis thinks adjusted pre-tax profits will rise to £145m, giving EPS of 21.9p (up from £130m and 20p in FY2017).
| ENTERTAINMENT ONE (ETO) | ||||
| ORD PRICE: | 300p | MARKET VALUE: | £1.29bn | |
| TOUCH: | 300-301p | 12-MONTH HIGH / LOW: | 301p | 211p |
| DIVIDEND YIELD: | 0.4% | PE RATIO: | 75 | |
| NET ASSET VALUE: | 149p* | NET DEBT: | 43% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 401 | -2.5 | -1.4 | nil |
| 2017 | 396 | 0.8 | -0.5 | nil |
| % change | -1 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £668m, or 155p a share | ||||
