- Hasbro acquired eOne in 2019 for approximately $4 billion.
- The goal was to create its own software based on Disney-like intellectual property.
- Hasbro has realized that outsourcing content creation is more cost-effective than owning a media company, so it’s now selling eOne.
In 2019, Hasbro acquired media company eOne, interested in the idea of developing software based on its own games. Fast forward to today, and the game maker has announced plans to sell eOne in a stunning turnaround.
Here’s why Hasbro bought eOne in the first place and what it hopes to achieve by selling the assets.
What is eOne?
Entertainment One, also known as eOne, is a media company that produces content for television, film and family brands. It creates content in comedy, drama, factual and non-fiction categories.
The company has the ability to write, develop and produce scripts.
It also includes development studies in the United States, Canada, South America, the United Kingdom, Australia, and China.
eOne has been involved in the development and production of many popular titles. The Family Brands division owns Peppa Pig, My Little Pony, Power Rangers, Ricky Zoom, PJ Masks, Transformers and other popular children’s cartoon brands.
Why did Hasbro buy eOne?
In December 2019, then-president Brian Goldner decided to buy Canada-based eOne for about $4 billion. At the time, eOne owned Peppa Pig and other intellectual property aimed at younger audiences.
The acquisition of eOne allowed Hasbro to control the production of its programming and tie it to the production of physical merchandise.
Goldner argued that Hasbro needed to be in a better position to offer content to streaming services. The acquisition of eOne gives Hasbro access to a wide range of children’s entertainment intellectual property that it has never owned before.
eOne’s acquisitions include Death Row Records, Dualtone Records and the eOne Music division, which owns the music catalog of the Lumineers, RZA and Chuck Berry.
However, Hasbro later sold the music division to entities owned and controlled by Blackstone for $385 million.
Why sell eOne?
Hasbro quickly regretted buying the eOne and found out they paid more. A proxy battle with activist investor Alta Fox didn’t help matters, as Alta Fox tried to sell Hasbro its toy division.
The death of CEO Brian Goldner in October 2021 was instrumental in the current CEO’s decision to explore a sale of eOne.
According to analysts, eOne’s media is not a perfect fit for Hasbro, and selling eOne would help the toy maker focus on improving its current intellectual property and product line.
One investor, Fred DiSanto, said in a letter to Hasbro management that Hasbro “doesn’t need to own eOne to bring Dungeons & Dragons to the big screen,” and that Hasbro could easily strike a deal with such a studio. Instead of paying exorbitant prices to own a media company, eOne for less.
It may be true that at some point owning the studio outright will be less expensive. However, this point will be reached if the company can expand its manufacturing business. A company like Disney has hundreds of properties to create content with a limited selection of Hasbro.
Hasbro’s plans are moving forward
On October 17, 2022, Hasbro announced plans to sell eOne, but would retain the rights to Peppa Pig and possibly others. It intends to maintain its family content division, but will enter into production deals with established studios and production companies to create a variety of intellectual property content.
The move was applauded by Wall Street, as it allowed game makers to focus more on their current offerings and pare them down to a manageable size.
However, on October 14, 2022, analysts at Bank of America stated that Hasbro is “destroying long-term value.” Magic: The Gathering Property by selling too many collectible cards.”
The announcement led to investor selling and a spike Hasbro’s stock plunge value. Magic’s decision to dilute the card game with excess cards only disrupted sales of card sets and reduced the value of existing cards.
It remains to be seen whether Hasbro’s management team will reverse this decision or risk their sustainability and apply a similar strategy to their other intellectual properties for short-term gains.
Ultimately, it’s too early to tell what Hasbro’s next move will be, as Hasbro is facing a weak holiday season and major retailers are generally relying on discounts to move their merchandise.
Overall, Hasbro plans to have three brands worth $1 billion by 2027 and expand its licensing business in the near future. Expect single-digit annual growth rates to reach $8.5 billion in revenue by 2027.
Selling eOne to Hasbro makes sense because it would be more economical to outsource production. The question remains how much money Hasbro will make from eOne sales.
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