Entertainment One Seals Deal, Seeks More
NEW YORK (The Deal) -- Entertainment One Ltd. may be on its way to an acquisition spree with the purchase of Paperny Entertainment Inc. as the Canadian media giant seeks to boost its television division.
EOne announced Thursday that it was buying nonfiction TV producer Paperny for C$29.2 million ($27.1 million), which consists of C$14.5 million in cash and almost 2.6 million common shares. EOne, which lists on the London Stock Exchange, has a market capitalization of about £926.9 million ($1.6 billion).
The media company has had and continues to have conversations with a number of television companies in the U.S., the U.K. and Canada, according to a person familiar with the situation.
While that person declined to disclose names of these companies, the source said the next acquisition eOne seals in the television sphere is more likely to come from the unscripted area. But, this person also said it's hard to speculate whether the company's next deal will come from its film or television division.The Toronto-based company has two main divisions: its film distribution and production unit and television production and programming unit. EOne released The Twilight Saga and has been producing Haven on the Syfy network. While EOne recently made deals in the film sphere with its acquisitions of Phase 4 Films in June and Alliance Films last year, its latest transaction comes as the company began its plan 18 months ago to grow its television business both organically and strategically. After having talks with a number of companies since then, EOne decided to seal a deal with Paperny. The two began to focus on the deal about 12 months ago, the person familiar with the situation said. Vancouver-based Paperny had C$17.6 million of revenue and net income of C$5.1 million in 2013, according to a statement from EOne. The company is known for producing non-scripted television shows like Chopped Canada on Food Network Canada and Yukon Gold on History Channel Canada. The acquisition makes sense for EOne because it gives the company a wider portfolio of shows to pitch, according to Frank Hawkins, partner at Scalar Media Partners LLC, a consulting firm to the media and sports industries. "It probably opens up one or two additional networks," Hawkins said. And, because networks tend to be connected And this could bring a synergy for EOne, as networks tend to be connected in groups, he added. Reality TV is a hot sector in the United States and the rest of North America, that has yet to wane after it began gaining in popularity a few years ago, added Jesse Janson, director of acquisitions at media firm Janson Media. Smaller production companies have increasingly been pitching themselves to their bigger peers to be sold, said Hawkins. Of course, those with a particular desire to remain as purists, such as Eagle Rock Productions, are selling their shows but not the entire business. He said he expects this trend to continue, as bigger companies always want to diversify their portfolios and there is also a "fair amount of profit in the market right now." While he has seen this happen "all over the map," he said that producing scripted shows is more difficult than non-scripted shows. As such, scripted production houses have a different benchmark: "If you've got two scripted hits and you're small, then you want to sell," Hawkins said. Canaccord Genuity Group Inc. advised Paperny with a team lead by Sanjiv Samant and Brent Layton. The acquisition is expected to close by July 31.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts