By Gary Symons
TLL Editor in Chief
While the rest of us were chowing down on leftover turkey and napping on the in-law’s couch in a tryptophan-induced coma, Hasbro and Lionsgate were busy inking a deal for the sale of Entertainment One.
Hasbro announced on December 27 it had completed the sale to Lionsgate for $375 million in cash, with Liongate also assuming all current production financing loans. The deal terms were first announced in August 2023, and this announcement confirms the sale has closed on the agreed upon price and conditions.
The big question for many is, why would Hasbro buy Entertainment One for roughly $4 billion in 2019, and then sell it at a loss in 2023?
The short answer, as Hasbro said last week, is that the sale “underscores Hasbro’s Blueprint 2.0 strategy; Hasbro will continue to develop and produce entertainment based on its rich vault of Hasbro brands.”
The basic idea was to streamline the company, to focus on eight top brands, and put Hasbro’s efforts into turning each of those franchises into a billion dollar brand. The plan also allowed for significant cost reductions and the offloading of debt.
In the current meta, Hasbro CEO Chris Cocks says the goal is to work in entertainment through partnerships.
“Entertainment remains a priority for Hasbro,” Cocks insisted. “Hasbro will continue to develop and produce entertainment based on the rich vault of Hasbro-owned brands. We will also bring to life new original ideas designed to fuel all areas of Hasbro’s blueprint including toys, publishing, gaming, licensed consumer products, and location-based entertainment.
“As part of the sale, we expect to move to an asset-light model for future live action entertainment, relying on licensing and partnerships with select co-productions.”
Hasbro paid $4 billion for eOne in 2019, and since sold the music division for $375 million, but even with the $500 million from this sale, the acquisition of eOne is a money loser overall. However, Cocks said the important takeaway is that Hasbro is much better positioned for growth and profitability.
“This sale fully aligns with our strategy, and we are pleased to bring the process to a successful close,” said Cocks. “Lionsgate’s management team is experienced in entertainment and adept at driving value, and we’re glad to have found such a good home for our eOne film & TV business. We look forward to partnering with them, especially on a movie adaptation of Monopoly.”
According to the industry publication Deadline, the sale has a lot to do with Cocks’ philosophy, which is to focus on Hasbro’s core business. Deadline’s sources say Cocks was not in line with Goldner’s vision, and saw the entertainment division as a financial drag on the overall company.
“He does not believe in Brian’s vision, or have interest in anything that doesn’t sell toys directly,” said one Deadline source.
That aligns with what Hasbro has been saying to The Licensing Letter as well. In an interview at Licensing Expo this year, Hasbro VP Claire Gilchrist said Hasbro’s vision is to tightly focus on its eight top brands, and to streamline its overall operations.
“We are really going through a transformation,” Gilchrist told me, as she was flanked by gigantic Peppa Pigs and Transformer characters at the Hasbro booth. “Since the arrival of Chris Cocks as our new CEO about 14 months ago, we have undertaken a very significant, deep dive into which brands we should be focused on.
“So we’re really driving what Chris calls a ‘fewer, bigger, better’ strategy. The idea is let’s focus on the smallest set of core brands, which means we can grow them to be much bigger and better brands. And we’ve selected eight brands and we want to make all of them billion dollar US brands.”
The move also figures in to Cocks’ dislike of the entertainment business, with Hasbro sources saying the new CEO had an “almost antagonistic approach to entertainment,” as he dislikes the unpredictable revenue from film releases, and sees the margins as too low in general. As well, Cocks reportedly doesn’t like the idea of producing content that is not related to Hasbro, and would prefer to work as a licensor partner to studios who do the actual work of producing films of TV series based on Hasbro properties.
“He does not believe in Brian’s vision, or have interest in anything that doesn’t sell toys directly,” one source told Deadline in 2022.
The sale of eOne puts Hasbro back into the business of licensing its brands for content, rather than trying to also manage production of entertainment that has nothing to do with Hasbro. Many analysts believe that eOne and its parent Lionsgate will be heavily involved in the future production of content based on Hasbro brands, such as a Power Rangers film and series, a Dungeons & Dragons series, and game shows based on Hasbro board games like Mouse Trap or Monopoly.
One final note is that, while Cocks is not a fan of Hasbro’s participation in film or television production, he is very hot on producing video games and working in the location-based entertainment (LBE) field. Of late, we have seen a number of announcements particularly in the LBE sector in which Hasbro has partnered with other companies on NERF experiential parks around the world, and on Peppa Pig theme parks, for example.