Canadian writers and directors, say hello to your new toymaker overlords.
On Monday morning, the Pawtucket, R.I.-based toy and game colossus Hasbro Inc. announced it had closed its US$3.8-billion purchase of Entertainment One Ltd., Canada’s largest publicly traded independent film and television company.
But if the companies managed to win over shareholders and regulators, there’s an important constituency that may still be wondering what happens next.
“There seem to be some [concerns] with some of the Canadian industry that, ‘Oh, my God, we’re losing a big producer,’” said Darren Throop, chief executive of eOne, in a recent interview. “That is not, in my opinion, accurate in any regard. In fact, we’re strengthening Canadian producers.”
And so Mr. Throop and Brian Goldner, CEO of Hasbro, felt it necessary to sit for an interview with The Globe and Mail to sketch out their vision of the post-acquisition company, and to reassure Canadian creators they will be playing a key role in the company’s future.
That is, as long as they like toys and games.
Hasbro says it holds the rights to about 1,500 brands, ranging from toy figures such as Action Man and the Micronauts to the classic fantasy game Dungeons & Dragons and the collectible card game Magic: The Gathering. It believes many of those properties can find new life in other formats, including TV and feature films, with eOne’s help.
“We have a few brands that we’re known for, across storytelling in multiple dimensions, brands like Transformers or My Little Pony that we had made into an animated TV show, or a live-action film,” Mr. Goldner explained. He was on a speakerphone dialled in to Mr. Throop’s office in eOne’s downtown Toronto headquarters, which was decorated with film, TV and music posters for some of eOne’s properties. In the corner sat several Nerf guns, including an unopened Fortnite Super Soaker: gifts from Mr. Goldner.
“We had done that a couple of times, and yet we owned 1,500 brands. Dozens of those brands had been very popular during the seventies, eighties, or nineties, and yet we didn’t have enough scale or capability to take those brands and reimagine them for contemporary storytelling in TV or film, or in animation, and bring them to the global marketplace.”
EOne, which is listed on the London Stock Exchange, has about 1,100 employees, concentrated in Canada, the United States and Britain, as well as some other territories, with operations in television (CTV’s Cardinal and The Rookie, Global TV’s Nurses, CBC’s Burden of Truth and forthcoming Fox drama Deputy), film (Queen & Slim, 1917), music, virtual reality and live action entertainment.
It also has a peppy porcine property under its Family & Brands division that has burrowed into the waking dreams of every parent with preschool-aged children. Under eOne’s steady stewardship, Peppa Pig has exploded from a series of animated shorts on a single British broadcaster into a global phenomenon of toys, games, live entertainment, music and more. Last year, revenue attributed to the property jumped 20 per cent, to £90.2-million ($154.5-million).
Still, both Hasbro and eOne are coming off a downbeat period. Hit by the liquidation of Toys “R” Us, Hasbro’s net revenue for 2018 fell to US$4.6-billion from US$5.2-billion the previous year; operating profit dropped to US$331-million from US$810-million.
EOne, meanwhile, reported 2019 revenue of £941-million down from £1.03-billion in 2018 under the same sort of disruptive pressures as other producers and distributors of films with moderate budgets have been facing: Consumers would prefer to watch those films at home, usually on a subscription-priced streaming service such as Netflix, Amazon Prime Video or Crave.
“The theatrical window, to a degree, for independents, has collapsed,” said Mr. Throop, who on Friday was named to the Order of Canada. “And it’s a shame. I love Canadian film, I’m through and through Canadian, so I love anything that can represent our country. We’ve got some great filmmakers here, but the underlying economics of the business have changed so dramatically.”
Still, there is opportunity in disruption, as eOne’s TV production business rushes to meet the galloping demand of streaming services. But, as Mr. Throop portrays the situation, the company was in danger of being trampled in a land rush, as new streaming services from Amazon, Apple, Disney, Warner Bros., Comcast and others began locking up existing intellectual property.
“All of them are desperate for high-quality content and to a degree buying up a lot of the opportunities in the marketplace that were there for independent producers before,” Mr. Throop said. “So the landscape is changing so very, very quickly.” Developing original intellectual property can deliver large rewards, but it is also high risk, and depends on enormous patience. Gaining access to Hasbro’s IP doesn’t just give eOne a lifeline, it “supercharges” the company’s ability to develop new projects, Mr. Throop said.
“A lot of the independent streamers want branded IP, because it brings an immediate audience, and immediate familiarity,” Mr. Goldner said. With the acquisition of eOne, “all the brands we have and possess now get to be, if you will, played with by creators in Canada and then around the world.”
Mr. Goldner praises Canadian storytellers, saying that whenever he travels to Canada, “I’m always amazed not only by the kind of unique programming I’m able to watch there, but also the approach to news and the approach to the nightly broadcast, the global perspective that people have there, that we don’t get as much in American news making any more.
“You have people with these incredible creative minds and these global points of view, and what better way to bring their efforts out around the world than to marry that to eOne and Hasbro’s strategy?”
Mr. Throop is bullish. EOne has “done a fairly robust job exporting Canadian content around the world,” he said. “We’ve also built international businesses as we went along. But show me an opportunity where the entire Canadian producing community – that includes grips and lighting [technicians] and [production equipment companies] – all of it now has a front-row seat to be able to work with these brands and franchises. It’s probably the biggest opportunity that I’ve seen come to this country in a long time.”
The Globe and Mail, December 30, 2019