I was a fan of Peppa Pig from the first snort. I loved her before she was famous, and watched her grow from Channel 5s favourite little piggy into aglobal cash cow. Iown Peppa PigDVDs, books and toys, and occasionally, I let the kids play with them too. The only thing I didnt do was invest in the company that unleashed this treasureon the world, Entertainment One (LSE: ETO).
That now looks like a mistake. The firmsshare price is up 43% over the past 12 months. Today it announced that the shows award-winning animation studio, Astley Baker Davies, is set tomake 117 brand new episodes, securing a pipeline of piggy content for anotherfour years, starting from spring 2019. You can imagine how excited I am about that. Although to be honest, it was never in doubt. Entertainment One was hardly likely to stop feeding at this lucrative trough.
Peppa Pighas conquered theworld, hoggingthe TV schedules in the UK, Australia, US, Spain, Italy, France, Latin America and South East Asia. In China, ithas generated more than 24.5bn views since launch two years ago. I have even watchedit in Norwegian, although it loses something in translation.
Wallowing in money
Entertainment One has signed Peppa Pig contractswith licensing partners all over the world, recently adding a new line of toys in Brazil, and 40 partners in Russia covering toys, games and confectionery.The companysmarket capitalisation is more than 1bn. City forecasters are predicting highly impressive earnings per share (EPS) growth of 18% in the year to 31 March 2018, and another 10% the year after. Yet you can still buy the stockat a bargain 12.15 times earnings. This swine is a real pearl.
Satellite broadcasting giant Sky (LSE: SKY) is a much bigger beast, with a market cap of 17.22bn. It has also had a good 12 months, with the share price currently trading near its 52-week high of 1005p, thanks to the takeover bid by 21st Century Fox. When the news broke on 5 December Skys share price soared from 754p to 1,000p, and has hovered aroundthat level ever since.
The politics behind the bid are ugly, given Rupert Murdochs controversial reputation, and fears over media plurality. Yet the European Commission has given it the green light, based on competition grounds. UK regulators examining the proposed takeover should have reported on Tuesday but have been given an extension until after the general election, with a newdeadline of20 June.
Skys directors agreed toFox buying the 61% of the UK broadcaster it does not already own in a deal worth 11.7bn. Murdoch has a habit of getting his way, especially when politicians are involved, and mostanalysts expect the deal to go through, including RBC Capital Markets, whichreckons investors should buy on that basis. Be warned: there is a slim chancethat the deal will collapse, which couldknock10%-15% of the share price. However, that would also offer a compelling buying opportunity.
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