Mediaboss Marketing

Entertainment One, the film and TV distribution company behind childrens favourite Peppa Pig, more than doubled its profits last year after a licensing deal with Amazons digital movie service, LoveFilm, bolstered revenues.

However, its strong performance was overshadowed by concerns that it could over-stretch itself or dilute its shares in order to buy Alliance Films, a rival film distributor in Canada.

Entertainment Ones sales grew 7pc to 502.7m during the 12 months to April, as the rapid growth of licensing deals to digital movie services helped to offset a slowdown in the money it makes from distributing films to cinemas. Pre-tax profits jumped from 11.4m to 23m.

The company, which is headquartered in Canada and listed on the London Stock Exchange, launched 152 films in the cinema last year including the fourth instalment of the Twilight Saga vampire films, Breaking Dawn, helping to grow film revenues 17pc to 272m.

However, the real lift came from its digital business, which doubled revenues to 66m. Of that, a significant portion came from a five-year deal to license films to LoveFilm, which competes with the likes of Netflix (NasdaqGS: NFLX - news) in allowing users to rent films on-demand over the internet. Digital (Milan: DIB.MI - news) revenues now account for 13pc of Entertainment Ones total income.

The international expansion of Peppa Pig also fuelled growth at Entertainment (LSE: ETO.L - news) One. The cartoon character originally created by British animation firm Astley Baker Davies launched in the US during the period and will make its debuts in the Far East and Latin America later this year.

However, analysts and investors expressed concern about Entertainment Ones potential bid for Alliance Films, after it confirmed that they were in talks.

Alliance, whose properties include What To Expect When Youre Expecting and Piranha 3DD is valued at around $300m, more than Entertainment Ones debt facility which stood at $244m at the end of March, raising the likelihood that the Peppa Pig owner will have to raise more debt and increase its share offering to fund any deal.

Shares in Entertainment One have slumped from around 155p to below 130p amid rumours of the potential bid, although rose 2.4 to 137.9p in afternoon trading.

Darren Throop, chief executive, said Entertainment Ones current share price was kind of ridiculous and had effectively stymied its ability to buy Alliance.

Continued here:
Amazon deal boosts profits at Entertainment One but bid plans weigh on shares