Hasbro, the Rhode Island-based toymaker, has announced the sale of Toronto-based production studio eOne to Lionsgate for $500 million. The deal includes $375 million in cash and the assumption of production financing loans. This move allows Hasbro to pay down its floating rate debt and refocus on its toy and game businesses. Without eOne, Hasbro plans to return to licensing and partnerships with studios. Analysts have reacted positively to the announcement, expecting higher cash flow generation and earnings power for the company. Hasbro acquired eOne in 2019 for $4 billion, gaining popular brands like Peppa Pig and PJ Masks. However, Lionsgate will gain access to eOne’s library of nearly 6,500 titles. Hasbro initially sought to sell eOne in order to divest television and film projects unrelated to its brands. The sale comes during the writers and actors strike, which is expected to impact Hasbro’s full-year revenue. Hasbro will continue to rely on partnerships with studios like Paramount for theatrical releases and TV productions. The company emphasizes its focus on being a leading toy and game company. Following a similar asset-light model as rival Mattel, Hasbro will minimize financial risk by utilizing third-party studios and distributors for content creation. While potential box office gains may be reduced, successful movies can lead to increased merchandise sales and brand loyalty. Hasbro is also investing heavily in digital gaming and has seen success with Magic: The Gathering Arena. The upcoming release of Baldur’s Gate 3 is expected to bring significant gains and elevate the Dungeons and Dragons brand. CEO Chris Cocks believes the game has the potential to outperform the company’s film licensing revenue for the past decade.
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