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Reports: ITV Eyeing Possible eOne Acquisition

14 Apr, 2016 By: Erik Gruenwedel

British pay-TV operator ITV reportedly is pursuing possible acquisition of Canadian film and TV distributor Entertainment One (eOne). The official broadcaster of “Downton Abbey,” "Broadchurch” and “X-Factor” in the U.K., ITV is upping acquisitions of production companies and distributors in an effort to reduce its dependence on TV advertising, according to a report in the Financial Times and other media outlets, including Bloomberg.

Indeed, eOne last year refinanced $403 million in debt, in addition to completing a $283 million equity rights issue. With eOne’s stock price down 50% from a year ago, the company this year is projected to generate pre-tax earnings of $171 million on revenue of $1.1 billion, according to analyst Peel Hunt.

The company in March inked a deal with Sony Pictures Home Entertainment to distribute specialty movie label Momentum Pictures across physical and digital home entertainment platforms globally — except in Canada. That’s because eOne in February inked a global packaged-media deal with 20th Century Fox Home Entertainment, which included distribution in Canada.

"ITV has the financial capability to do this deal, and acquiring eOne's business would significantly build ITV's content reach," Ian Whittaker, analyst at Liberum, wrote in a note.

While primarily a movie distributor (it owns Canadian rights to "The Hunger Games," among others), eOne last year acquired a majority stake in Mark Gordon Company, creator of “Grey’s Anatomy,” in addition to purchasing ownership stake in the Peppa Pig children’s brand. It has also inked deals with DreamWorks and Participant Media to license their content.

While eOne and ITV both declined comment on the scuttlebutt, Peel Hunt analyst Alex DeGroote questions ITV’s interest in movie distribution. 

“ITV is about TV, TV, TV,” DeGroote told FT. “We’re very skeptical that they’d have an interest in film distribution.”

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