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Efforts to strengthen Entertainment One’s film division will hit its full-year profits by almost £50m, the company announced today, after it renegotiated one of its main distribution agreements.

Entertainment One is best known for producing television programmes such as Peppa Pig, but has been working to reduce its reliance on the popular cartoon through investments in film production and distribution.

Today the company said it has terminated one of its contracts and replaced it with a new distribution agreement. It said the new agreement will increase its underlying profitability and cash flow, but will require a one-time payment of $25m which will be included in its upcoming financial results for the year to March.

Further investments in “reshaping” the film division will lead to an additional £27m of one-off costs, as the company works to shift from a focus on physical distribution activities to digital content.

Together, the costs will have a total impact of around £47m, but the company said its underlying earnings for the year will be in line with management expectations, and chief executive Darren Throop said the changes will have “a positive impact” over time.

Copyright The Financial Times Limited 2017. All rights reserved.
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