Shares in Entertainment One (LON: ETO) dropped over two percent in early trading after the Canadian producer warned of the “modest” profit hit it could face next year.
The group warned of lower earnings after ABC cancelled the political drama Designated Survivor after the second season, a political conspiracy thriller starring Kiefer Sutherland as the US president.
The FTSE 250-listed group insisted there would be no impact on its annual results, which will be released next week.
“There may be a modest impact on next year’s earnings, depending on the outcome of discussions with other parties,” said Entertainment One.
“However the Group remains on track to deliver against its stated strategic management expectations for the future.”
The group told the London Stock Exchange in a statement that it is in “active discussions with other parties for further series of the show”.
The cancelled series saw high ratings and viewing figures throughout the first season, which then plummeted during the second season.
The group’s flagship show is Peppa Pig, which has continued to perform well in the UK and Australia but “significant demand” in China has been driving growth.
“The Peppa Pig children’s series remains a big driver for the company as it performs well in mature markets like the UK and Australia and expands in newer geographies like China and Japan,” said Russ Mould, AJ Bell investment director.
“Being too closely tied to one blockbuster franchise is a risk though, as investors in Harry Potter publisher Bloomsbury could attest. Bloomsbury traded close to £4 when Pottermania was at its height in the mid-noughties but now changes hands for just 176p.”
