Hasbro to sell film and TV unit, cuts forecast on Hollywood strike hit
Reuters
Published Aug 03, 2023 06:39AM ET
Updated Aug 03, 2023 10:11AM ET
By Savyata Mishra
(Reuters) -Hasbro lowered its annual revenue forecast as it expects a hit from the ongoing strike by Hollywood writers and actors, and said it would divest its Canadian film and TV business to focus on selling toys and games.
Shares in the company, which beat second-quarter revenue estimates, rose 4.3% in early trading.
Hasbro (NASDAQ:HAS) said it would sell its eOne film and TV studio to Lionsgate Entertainment by year-end for about $500 million, adding that its revenue forecast includes the performance of the business being sold.
The eOne business made up about 85% of the company's entertainment segment revenue last year, Hasbro CFO Gina Goetter said on a post-earnings call.
The unit's sale is aimed at creating an "asset light model for future live action entertainment, relying on licensing and partnerships with select co-productions," CEO Christian Cocks said.
Warner Bros Discovery (NASDAQ:WBD) joined Hasbro in flagging uncertainty due to the industry strike that has left scores of shows and movies in limbo.
"With the sale of its eOne Film & TV business to Lionsgate, Hasbro is dodging a bullet in terms of the content pipeline," said James Zahn, editor of trade magazine The Toy Book.
The toymaker said margins at its entertainment segment are expected to slide due to the strike as well as a $25 million charge it took from the lackluster performance of "Dungeons & Dragons: Honor Among Thieves" at the box office.
The company's revenue for fiscal 2023 is expected to decline 3% to 6%, compared with its previous outlook of a low-single-digit fall, as the entertainment segment's top line is forecast to shrink between 25% and 30%.
Hasbro also lowered its growth target for adjusted operating margin to between 20 basis points (bps) and 50 bps, from 50 bps to 70 bps rise forecast earlier.
The Monopoly maker's net revenue of $1.21 billion beat analysts' average estimate of $1.12 billion, according to Refinitiv IBES data.
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Written By: Reuters
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