After over a year of development, eOne has just started to sell its products. Dungeons & DragonsSeries of live-action television. Shepherded by Red Notice filmmaker Rawson Marshall Thurber, it is based on Hasbro’s wildly popular fantasy role-playing game franchise.
The series was conceived as eOne’s priciest, largest-scope projects ever, a drama that would demonstrate the full potential of Hasbro’s 2019 acquisition of the indie film and TV studio. It started garnering bids and all seemed to be going according to plan — until the process was interrupted yesterday by the toymaker’s announcement that it plans to sell eOne’s film and TV businesses.
While Hasbro has been preparing for a potential sale of most of eOne’s assets for quite a while, working with J.P. Morgan and Centerview Partners, the timing of the latest news is raising eyebrows. M&A activity has become complicated by economic conditions of late, with rising interest rates frustrating some dealmakers since many acquisitions depend on loans and money has become significantly more expensive to borrow. The official launch of the sales process takes place a week prior to Thanksgiving. This causes anxiety among eOne staff as they prepare for the holiday season.
What is on sale?
Prior to eOne’s 2019 acquisition by Hasbro for $4B, the company was divided into three divisions: Music; Family Brands, which included such staples as Peppa Pig and PJ Masks, as well as all licensing merchandising-related products; and Film and TV.
Hasbro has since sold eOne’s music business to private equity firm Blackstone last year for $385 million. The family brands business has been rolled into Hasbro’s brands licensing and merchandising operation.
What is left — and is now looking for a buyer — is all non-Hasbro branded scripted and unscripted TV production and all film production and related global distribution, as well as a 6,500+ title content library and Hasbro’s interest in eOne’s Canadian film and TV business.
eOne has traditionally been known for being a distributor of third-party content. The Walking Dead Over the past decade, the indie studio has grown its film- and TV production business with the Lionsgate library. Although its library generates cash, the bulk of the nearly $1B in revenue that the assets for sales generated last fiscal year was derived from current TV series, including movies. The Rookie franchise, Cruel Summe for Yellowjacketsr, Naked and afraidAnd the future The RecruitAnd A Gentleman In MoscowRecent feature hits The Woman KingAnd Mrs. Harris goes to Paris Also available: Freaky TalesNow in production
The film and TV division has experienced steady growth in its revenues and has enjoyed a significant positive EBITDA over the past ten years. It is now being auctioned three years after Hasbro acquired it.
Why Should You Sell?
This is part of a plan that could reduce costs by up to $300 million. Hasbro promised investors that they would focus on inflation as it is reducing consumer demand for toys and games. “fewer, bigger, more profitable brands.”
But there are deeper reasons for the asset sale, which ends late Hasbro President and CEO Brian Goldner’s decade-long pursuit of expanding the company beyond toys and games and turning it into a TV and film powerhouse.
Pawtucket’s Hasbro in Rhode, had previously been content to simply license TV and movie characters and make toys out them. Goldner was the key force behind Hasbro’s embrace of Hollywood. Goldner, a young and rising executive in his 30s, brought with him a vision. He wanted to prove that the entertainment industry was not squandering properties as valuable as those in Marvel and DC. These early film projects include Transformers And G.I. JoeThey were huge successes and the company would go onto to sign lucrative streaming deals with Netflix, other distributors, and other companies. Goldner concentrated his attention on buying an indie production studio as Hasbro lacked the necessary infrastructure and talent. There was also a 2009 cable TV detour with Discovery Communications’ short-lived Hub channel. This joint venture was with Discovery Communications. Hasbro plunked down $300 million for a 50% stake and $200M for production but, after a rocky start, the channel was rebranded again in 2014 as Discovery Family, with its programming focus broadening and Hasbro’s stake decreasing to 40%.)
Hasbro acquired eOne in 2019, after talks with Lionsgate and DreamWorks Animation fell through. Goldner stated at the time that both businesses were incompatible. “highly complementary with substantial synergies and a great cultural fit”Hasbro was also a party to the deal. “adding proven TV and film expertise, and creating additional opportunities for long-term profitable growth.”
The merged company was set on this path by Goldner, with the eOne segments beginning to build a slate for new Hasbro and nonHasbro film/TV projects. Goldner, a 58-year-old man, died from prostate cancer in October 2021.
He was replaced by Christopher Cocks, who had previously been head of the company’s Wizards of the Coast division, home to fantasy gaming brands like Dungeons & Dragons and Magic: The Gathering. With Cocks at the controls, Hasbro announced last August that eOne’s longtime chief, Darren Throop, would leave his post by the end of the year.
According to sources, Cocks “from Day 1 had a very different, almost antagonistic approach to entertainment” and doesn’t like the and margins of film and TV production that are not set like putting a wholesale price on a toy, for example, and could fluctuate. “He does not believe in Brian’s vision,”One person said: “or have interest in anything that doesn’t sell toys directly.” There has been a lot of pressure on reducing investment in non-Hasbro content since Goldner’s death, sources said. Cocks stated in interviews that he will be focusing on non-IP film and TV production. This is a business also marked by volatility.
How would the split function?
This isn’t a simple divorce, as Hasbro indicated yesterday that it intends to keep the ability to create and produce animated shorts, TV scripts and theatrical films for audiences who are interested in core Hasbro IP.
Sources say that there is not much clarity about how this would work. The eOne team is deeply involved with Hasbro IP through a slew if projects, including live-action film.Transformers: Rise of the BeastsAnimation Transformersfilm, a Play-Doh animated movie Power RangersThe film and television series Dungeons & DragonsThere are also scripted series and game shows and competitions based on board and toy games like Guess Who?, Mouse Trap and Monopoly and Easy Bake Oven and Play-Doh. It would be difficult for the two to come apart. There was no mention in yesterday’s announcement whether any eOne executives would stay behind to work on Hasbro IP-driven projects, and people connected with the deliberations say there are no ongoing talks for that.
Hasbro will not spend as much as eOne to produce film and TV, or build an infrastructure including production and postproduction units, as well as business affairs operations.
Sources said that eOne will continue to produce and develop unscripted series based upon Hasbro IP. There is also a possibility that this could be done on the scripted side for ongoing project after the TV and film divisions find new homes.
Having so many film and TV projects in active development or production with multiple network partners, that may be the only viable option since they all need to keep going and Hasbro’s advanced sales process does not allow enough time to come up with an alternative.
Cocks reportedly sent yesterday’s internal note to eOne staff in a positive sign. In it, he reportedly revealed a desire to find a buyer that Hasbro would stay in business with because the company believes that eOne’s film and TV teams are so deeply immersed in and passionate about the Hasbro IP that it would be a shame to lose that.
What’s next?
Despite the fact that the assets for sale do not include one of eOne’s most prized possessions, Peppa Pig, Hasbro yesterday said that it had already received multiple inbound offers.
Even in today’s tough economic environment, dominated by recession fears, some deep-pocketed buyers remain on the hunt for blue-chip libraries and companies with production capabilities to satisfy streaming demand. “There’s still a good amount of private equity money out there for the right kind of properties,”One dealmaker said.
One analyst who has tracked Hasbro’s entertainment adventures in recent years, Eric Handler of MKM Partners, believes the company’s management team has plenty of options. “There’s no gun to their head,”In an interview, he shared his thoughts with Deadline “If they can’t get an attractive price, they don’t need to do a deal to address issues on their balance sheet.”The goal is to create a cohesive grouping of assets. Handler was a fan of the eOne agreement when it was first created, but reality has set in that there are other TV and film projects such as The Woman KingOder Yellowjackets — however successful on their own terms — “couldn’t be put through the company’s full flywheel”he stated that he was referring to consumer products as well as other brand extensions.
Investors were also excited by the possibility of a sale. Hasbro shares rose 4.4% to $58.42 on Thursday. However, it was a rare positive session as they lost over 40% in 2022.
Sources anticipate that Hasbro will make presentations to buyers in December/early January, and make a selection before the end of the first quarter next year. Dungeons & Dragons: Honor Among ThievesThe movie will be released in March. eOne co-produced and co-financed the movie with Paramount and will release it in UK, with some distribution rights in Canada, in one of the indie studio’s biggest film efforts ever.
The studio’s TV team similarly worked very hard on the Dungeons & Dragons TV series, whose sale is now being caught up in eOne’s sale.
Sources in the industry are optimistic about both.
“I think buyers will still want Dungeons & Dragons because the brand is important, the script is good, and Rawson Marshall Thurber is an exciting piece of talent,”One person said.
Another article about the possibility of a sale of the company was added. “I think this is great news for eOne because it allows it to find a new owner who has a shared vision and is looking to grow the studio on all fronts.”
Dade Hayes, Anthony D’Alessandro and Peter White contributed to this report.