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Viacom’s Paramount Pictures Inks Deal with Hasbro

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Features of the deal

Media conglomerate Viacom (VIAB) has continued to strengthen its ties with leading toymaker Hasbro (HAS) by entering into a new production and content distribution agreement connected with Hasbro’s huge brand portfolio. As part of the deal, original stories will be developed.

The five-year deal will see the companies collaborating on live-action and animated movies. Hasbro’s Allspark Pictures and Allspark Animation will also play a part in the development and production of new films.

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Impact of the deal

The graph above shows the Filmed Entertainment business’s growth in the last five quarters. The Viacom-Hasbro partnership may support Viacom’s Filmed Entertainment segment. In 4Q17, Filmed Entertainment revenue rose 1.9% YoY (year-over-year) to $789 million, while in the last five quarters, it has grown at a compound annual rate of 0.5%, mainly driven by 29.8% YoY growth in its licensing business. However, this growth was offset by a ~43% YoY fall in theatrical revenue.

Paramount and Hasbro have worked together on five Transformers movies and two G.I. Joe movies. The next Transformers spinoff, Bumblebee, was also a result of their partnership. It is set to be released in December 2018.

The company’s theatrical and home entertainment business, part of its Filmed Entertainment segment, reported soft revenue due to a lack of hit movie releases in fiscal 2017. According to movie industry data and research service provider The Numbers, Paramount Studio finished fiscal 2017 with 14 movie releases, trailing Warner Bros. (TWX) and Universal (CMCSA), which released 18 and 15 films, respectively.

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