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eOne to Take $61 Million Hit to Profits After Movie Division Shakeup

Upcoming releases include Luc Besson's sci-fi movie 'Valerian'

International film and TV company Entertainment One said Friday that it has renegotiated a major film distribution pact as part of the reshaping of its film division. Overall the changes to the division will result in £47 million ($60.5 million) in onetime costs for the financial year ended March 31.

The company, which has partnerships in place with Mark Gordon and Steven Spielberg, said that despite the cost of the film revamp, it continued “to expect that underlying EBITDA for the financial year will be in line with management expectations.”

Entertainment One would not identify the film distribution deal that had been canceled and replaced with a new pact, but said it had involved a one-time payment by the company of $25 million. It added: “Management expects underlying profitability and cash flow to improve for films delivered under the new distribution arrangement.”

In addition, other one-off costs related to the film division “reshaping” have amounted to £27 million ($34.7 million), including the shift of its “physical distribution activities towards a digital-content-focused business model.” It said the changes are expected to improve profitability and cash flow.

Darren Throop, eOne’s CEO, said: “These changes are part of the reshaping of our film business for the future and are expected to have a positive impact on both cash flow and underlying EBITDA for the company.”

Entertainment One, which will announce its annual results May 23, reported £802.7 million ($1.03 billion) in revenue and £47.9 million ($61.6 million) in pre-tax profit in its previous financial year.

It has film distribution operations in Canada, Spain, the U.K., Australia, New Zealand and Benelux, which release around 200 films a year. Upcoming releases include Luc Besson’s sci-fi movie “Valerian” and Kathryn Bigelow’s riot drama “Detroit.”

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