Hasbro, Inc. (HAS) Earnings Call Transcript & Summary

Good morning. We are delighted to welcome you to Hasbro's showroom at New York Toy Fair, where we are showcasing the industry's most innovative play and entertainment experiences. I am Kristen Levy, Manager of Investor Relations for Hasbro. We have a tremendous team here today, including Brian Goldner, John Frascotti and Deb Thomas. They are joined by leaders from our Consumer Products toy and game business, our gaming initiatives and for the first time a team from eOne, including Darren Throop. Following the presentations, we will answer your questions. You will then tour our showroom to see firsthand the innovation Hasbro is delivering to global consumers this year. Before we begin, please be aware that during the formal presentations and the question-and-answer session that follows, members of Hasbro management will make forward-looking statements concerning management's expectations, goals, objectives and similar matters. There are many factors that could cause actual results or events to differ materially from the anticipated results or other expectations expressed in these forward-looking statements. Some of those factors are set forth in our annual report on Form 10-K, our most recent 10-Q and today's meeting and in other public disclosures. Additionally, our discussion and presentation today include information regarding non-GAAP financial measures. You can find a reconciliation of GAAP to non-GAAP results on our investor website. This morning's presentation will include preliminary pro forma financials for the combination of Hasbro and eOne. As we complete the U.S. GAAP conversion and fair valuation of eOne's acquired assets and liabilities, we expect adjustments to be made to these financials. As a reminder, photography or recording is not allowed at any time, including during the presentation and videos presented this morning. A copy of the slides will be available on Hasbro's investor relations website. I am pleased to kick off today with a great video on the powerful combination of Hasbro and eOne, then Brian Goldner will come on stage to start our presentations. Let's take a look. [Presentation]

Thank you, Kristen. Good morning, and welcome to Hasbro's 2020 investor event here at Toy Fair. Our North Star is to create and operate a leading play and entertainment company that drives value for our stakeholders. This year, Hasbro's talented team comes together with our new world-class team from eOne to share with you our plan to unlock the value of our organization. We've been on this path for more than a decade, and it's based on our proprietary view to where consumers and audiences are going around play, content and shopping moving rapidly to new channels, omnichannel and e-commerce retailing. It's built on consumer insights, innovation and storytelling with brands at the center. In a moment, I'll share with you Hasbro's evolved brand blueprint that incorporates the enhanced value creation opportunity that comes from the addition of eOne. Hasbro's growth pillars are clear: Consumer products, including toys and games and licensed consumer products; driven by our innovation and expertise in merchandise and global retail; gaming, led by the tremendous work of the team at Wizards of the Coast; and then entertainment, delivering profitable entertainment across platforms, led by the teams at eOne. This is where audiences and consumers are going. Hasbro is uniquely positioned to successfully and profitably execute across these expansive opportunities. In 2018 Toys"R"Us filed for bankruptcy. The industry took a step back, it's a moment in time. Hasbro's management team navigated this disruption, and we made commitments to return to the levels of growth that we had created from 2012 and 2017 over the coming years. And we achieved those results in 2019. We believe the industry returns to growth this year and Hasbro's traditional business will again grow revenue, improve operating cash flow, grow EBITDA and generate significant operating cash flow. To achieve this result in 2019, we turned around Europe. Wizards of the Coast delivered significant growth. We innovated across our brand portfolio and in partnership with the Walt Disney Company, we led the holiday with amazing lines for our partner brands. We are pleased and excited to announce today that we will partner with the Walt Disney Company on the Star Wars and Marvel franchises for many years to come. Our innovation, coupled with strong global retail programs delivered a successful holiday and continued momentum into 2020. Our ability to engage with consumers has enabled us to build an entertainment, licensing and digital business at 15% revenue CAGR over the past 5 years, with an operating profit CAGR growth of 11% over the period to nearly a 23% margin in 2019. In gaming, Wizards of the Coast's underlying margins are almost 3x higher than Hasbro's corporate average. And we know the investment in digital is synergistically driving tabletop and digital play. These are the growth drivers of our business over the next few years. In entertainment, our efforts to this point have largely built consumer engagement and yet represented largely investments. We now deliver profitable entertainment efforts through eOne, while this part of our business continues to grow with smart production spending as we create entertainment around more Hasbro IP. At the heart of Hasbro sits our unparalleled access and expertise in brands in the toys and games consumer product market. These teams innovate. They tell stories. They partner, they merchandise. They lead. They are creating play that kids, families, adults and fans want to experience. Our diverse portfolio and breadth of play patents uniquely positions us to deliver a growth rate ahead of the industry. Hasbro's owned IP delivers better than company average profitability, while partner brand revenues that bear royalty deliver below company average but appropriate profitability. The activation of additional Hasbro IP to our portfolio enables us to expand margins over time. Shortly, you'll hear more from John Frascotti, Eric Nyman and Casey Collins on the tremendous innovation, retail programs and execution of the teams. The success is evident in a brand like NERF. Over the last 10 years, we've built an entirely new Hasbro based on insights, innovation and storytelling. We've taken a brand like NERF from a $20 million business to be our largest brand. In the process, we invented a category, which caught the attention of competitors and retailers. We'll return NERF to growth through constant innovation, patented technologies and break frame marketing. You'll see some, but not most of our new initiatives today. The team is delivering on the NERF or nothing mantra to return NERF to growth. The team at Wizards of the Coast is on the path to becoming the leading publisher of fantasy games across any platform. MAGIC: THE GATHERING and DUNGEONS & DRAGONS are significant brands for us today, but also meaningful growth drivers across formats and in storytelling. Last year, we set a target to double the revenues of Wizards of the Coast brands over the 5-year period, and we're well on that path to accomplishing this mission. We have a plan to invest $200 million to $300 million over the next 5 years across multiple titles and platforms to create unparalleled gaming experiences with superior operating margins. We've seen players engaging across digital and analog with tabletop growth rates increasing as digital gaming rolls out to players. Chris Cocks is here and will share more about the team's plans. The insights around audience consumption of content and engagement are also trend right for Hasbro. Streaming content is driving engagement with fans, families and kids. Platforms outside traditional TV and films are now driving engagement in merchandise. Momentum is building from brands that have their origins in video games, such as our successful line of Fortnite NERF blasters. And through original streaming content, as evidenced by The Mandalorian on Disney+, where our action figures were top items this holiday, and we've had very strong preorder demand for the child merchandise available this spring. This trend is also clear with our brands. Transformers original content for fans and kids launches on Netflix in 2020, joining the long-running slate of transformer shows for fans, kids and preschoolers. Insights, innovation and storytelling delivered the second highest non-movie year for transformers following a film, translating to virtually flat sales in 2019. As many studios retain more of their IP for their own streaming services, Hasbro is uniquely positioned to create content for platforms, looking for the best branded content and IP, known by audiences and consumers. Hasbro of the future is well positioned to capture and capitalize on these trends. In fact, the most successful properties in the toy and game industry are content-driven. All top 10 global growth properties across the G11 markets were driven by content, for movies and TV to video games and online video in 2019. 7 of the top 10 growth properties across the top markets had movie tie-ins, and the remainder had content associated with them according to NPD. With this as a backdrop, let's look at the powerful combination of Hasbro and eOne. We now have a view to the potential of accelerated revenue growth. We've established a new preschool and kids center of excellence at eOne London to cultivate and create new IP as well as take on Hasbro IP, like MY LITTLE PONY, in partnership with the Hasbro team. And importantly, the team now has a full entertainment plan in development. Samantha Lomow will share more about this shortly. The acquisition of eOne expands our mix of revenue and profit beyond animated TV to drive toys and games into live-action TV and film as well as music and location based entertainment. Darren Throop, Olivier Dumont and Steve Bertram from eOne are here today to share more with you about the eOne business. Together, we've identified growth opportunities in each of these areas and are committed to creating meaningful, engaging experiences for audiences of all ages. Our TV and film team will activate Hasbro IP across platforms and give Hasbro more at-bats to connect Hasbro IP to audiences and consumers globally. In addition to the projects eOne is actively developing today, the opportunity to bring more Hasbro IP to the market is amplified through this powerful combination. This starts with creating amazing story and characters across platforms; film, TV, streaming and digital and expanding them into consumer products across toys and games and other licensed categories. This leads us to our evolved brand blueprint. It builds on the strength of Hasbro and eOne, and is the new blueprint we are executing across our business. We are poised to accelerate growth in areas where we've been investing as well as entirely new revenue and profit opportunities for Hasbro. Today, you'll hear from many of the leaders in charge of unlocking the value of our stronger and evolved strategy. With our new brand blueprint, we're positioned to deliver on our new medium-term objectives updated to reflect the acquisition of eOne and build on the prior targets we had for Hasbro's stand-alone business. We now are targeting revenue growth in the mid-single digits based on Hasbro's mid-single-digit revenue outlook and stronger growth contribution from eOne. In 2020, our combined results could enable us to achieve revenues in excess of $6.2 billion. This does not include any future revenue opportunities unlocked by activating more Hasbro IP through entertainment with eOne. Over the period, we look to increase operating profit margin from the combined 13.5% in 2019 to above 15%. Adjusted EBITDA in the high teens with improvement over the period. Operating cash flow in the $600 million to $700 million range on average per year. Gross debt-to-EBITDA of 2 to 2.5x over the next 3 to 4 years, and Deb will speak to this shortly, but we continue to target $130 million in synergies by year-end 2022 and the potential to deliver additional synergies. Over the course of this morning, you're going to hear from leaders in each of these areas. Consumer Products, gaming and entertainment. We'll take your questions and provide you with an opportunity to tour the great innovation in our showroom. Over the next few hours, we plan to address the questions you've been asking and to lay out the core elements of today's Hasbro as a global play and entertainment company. Now it is my great pleasure to introduce John Frascotti, our President and COO. John?

Good morning, everyone. Thank you so much for being with us this morning. I'd like to start by talking about the fact that as we approach our 100th anniversary as a company, we have the strongest, most diverse and most globally relevant portfolio of brands that we've ever had in the history of our company. And what makes Hasbro truly unique are the assets and capabilities that our team has put together over the past many years, starting with an expansive brand portfolio, a robust pipeline of entertainment across multiple formats and platforms now created and executed with excellence by our team at eOne, our consumer-insight driven toy and game innovation engine, a growing global licensed Consumer Products business that spans multiple lifestyle product categories, a rapidly developing digital gaming expertise, led by our team at Wizards of the Coast, a fan business that is accelerating globally, a well-developed omni-channel retail strategy with a focus on industry-leading e-com execution, and finally, speed, efficiency and risk mitigation across our supply chain. With all of these elements in place, we have what it takes to deliver top line and bottom line growth well into the foreseeable future. Our combined Hasbro and eOne brand portfolio from a toy and game perspective, reaches almost every major toy and game super category and spans across all demos and geographies. We have an expanded group of preschool brands, industry-leading story-led brands for fans of all ages, fantasy brands, for teens and adults and gaming brands for digital and analog gamers of all ages. And in addition to all the brands that we're marketing today, we also have an extensive library of brands in our vault. With eOne's capabilities and expertise, these vault brands will be a source of ongoing new IP development for years to come. Now we're very well positioned to organically grow our business and gain share in the overall toy and game market. From a macro perspective, the overall toy and game category is a massive global category, close to $80 billion in toys and over $170 billion in analog and digital games. It makes it one of the largest global consumer categories in the world, and we're confident in the long-term growth prospects of these categories. We believe that growth will be driven by a number of factors. First, growing middle classes in emerging markets with more discretionary income will generate increased toy and game consumption. Secondly, e-com unconstrained by shelf space limitations will continue to expand as a percentage of the overall business. And finally, parents will continue to view play and embrace play as critical to childhood development. So accordingly, we're going to continue to invest at above industry average levels in our toy and game innovation to deliver above industry average results. As we look to the coming season and even beyond to 2021, we've developed an exceptional collection of new products and innovation across our brand portfolio to drive this growth. In preschool, we have several significant growth drivers. With Peppa, PJ and Ricky Zoom, we're going to expand and enhance the toy businesses for these brands, both categorically and geographically, as we start to in-source portions of this toy business for these brands beginning in the fall of 2021. For PLAY-DOH, a brand that's over 65 years old, we grew the brand last year by delivering many great new innovations, and we plan to continue that growth this year with all new PLAY-DOH compounds and a great lineup of new play sets and segments. And with BABY ALIVE, the #1 global nurturing doll brand in 2019, we plan to continue to globally expand this brand with several new product introductions that you'll see in the showroom later today. Now for our action brands, both Hasbro brands and partner brands, we're going to continue to expand the reach and resonance of these brands with consumers and fans of all ages, all around the world. With NERF, we focused on developing next-generation technology to further distance ourselves from companies who have copied some of our older technology. And we started to see the results of our efforts in Q4 of last year, with the success of our new NERF Ultra line. This year, we have several exciting new innovations that will keep us a step ahead of the competition and will enable us to grow the NERF business in 2020. We have a great entertainment lineup for each of our Transformer segments, Transformers Rescue Box, Cyberverse Adventures and the War for Cybertron for our fans and outstanding product lineups for each of these segments. Our POWER RANGERS show continues to deliver large global audiences and excellent ratings. And with 2 Nick Kids' Choice Awards nominations, POWER RANGERS is clearly a favorite show for kids. So with 2020 being our first full year with the brand, we expect to build off of the success that we started last year with several innovative new products across more categories and more territories and with more licensees in our licensed Consumer Product business. With Marvel, several new feature films, TV shows and video games are coming this year and next, that will continue to engage Marvel's growing global audience. And we've partnered with Marvel to serve these audiences with several new collections of innovative new toys and games. Now I know there's been some commentary about the future entertainment lineup, but the truth of the matter is that viewers will have access to more marvel content this year and next than they've ever had before. Viewers of all ages now have immediate, anytime, anywhere access to the entire Marvel lineup, and will be able to watch Marvel content as often as they like. And obviously, this creates many opportunities for us to partner with our omni-channel global retailers to develop exclusive product lines that will bolster their toy businesses. Similarly, with Star Wars, with Disney+ hosting over 110 hours of Star Wars content, including feature films, new animation, and of course, the wildly popular, The Mandalorian, the #1 original series on Disney+. These shows are available to audiences whenever and wherever they want. Now let's move to our fashion segment. Over the past 5 years, since we began our Princess and Frozen license with the Walt Disney Company, we've invested in a world-class center of excellence for our fashion doll and fashion play set business in Los Angeles. And last year, we saw the results of our investment with the success that we achieved with Disney Frozen and Princess dolls and play set. In fact, we were the #1 licensee of Frozen products in 2019, with Hasbro accounting for close to 30% of all Frozen products sold. We've worked in close collaboration with the Walt Disney team also to develop new Princess collections like Comfy Squad and our new Style Series, which you see on the screen, and you'll be able to see downstairs, and these collections will continue into 2020 and beyond. Now as with Marvel and Star Wars, all of the Great Disney Princess and Frozen films are now available on Disney+. Children will be able to watch these favorite shows again and again as often as they want. And with our games brands, 2019 was a terrific year for our Magic and MONOPOLY franchise brands, and we're so excited about what's ahead for these brands. We also have a whole host of new games that you'll get to see during the showroom tour later this morning. And as you know, we have literally hundreds of classic titles that our teams are continuing to reinvent on an ongoing basis and bring to the market. Now in addition to toys and games, we've steadily over the past many years, expanded and grown our licensed Consumer Products business, under the leadership of Casey Collins, who will share some more details shortly. The point is that as we continue to invest in entertainment that brings our brand to life both our existing brands and brands that we bring out from our vault, we expect to continue to be able to aggressively grow our licensed Consumer Products all around the world. And we'll grow this business by taking advantage of a combined Hasbro and eOne organization that fuses the expertise and experience of these 2 great teams into one. Now looking ahead, our fan business is a significant growth accelerator for several of our brands and our partner brands. The first thing to note about our fan business is that fans come in all ages and stages. They share a passion for pop culture and a deep love of brand storytelling. Over the past few years, we've successfully grown our fan business, with 2019 being our biggest year ever, but we feel there's tremendous opportunity ahead for us with our fan business. We are focused on delivering fan-oriented product based on specific pieces of entertainment but also classic brand expressions. And as a result, we're not overly dependent on any single tent-pole film in any given year. But what's really different about our fan business, and this is important to understand, is that we're not limited to one singular product expression. Instead, our fan products include action figures, vehicles, role play and several other categories. And our fans get a premium product for a great value, giving our fans exactly what they want. Now from a global distribution perspective, we've executed our channel strategy for our fan business across new channels of distribution, both online and in stores and not just in the U.S., but internationally as well. And we're growing our fan business and fan engagement by executing our brands across our entire brand blueprint with entertainment, digital gaming, comic books, location-based entertainment, all fueling fandom for our brand 365 days a year. Last year, we launched HasbroPulse, our direct-to-consumer experience, a premium destination for our fans and an essential element of our fan strategy. With Pulse, we're building compelling and lasting relationships with our fans, by taking our fans behind the scenes with unique and authentic content about the brands and toys they love. With our Pulse products, we're surprising and delighting our fans with exclusive items found only on Pulse, crowd-funded items, fan-voted items, unique fan apparel and for the very first time, which we announced just this morning, new G.I. Joe, Snake Eyes Deluxe Action Figure for our fans, which they will love and our fans have eagerly responded to these products. In fact, demand for our latest HasLab item Transformers Unicron at $575 exceeded our expectations. Now at this event last year, our global e-com team shared with you how we are well positioned to win in e-comm. And I wanted to briefly update you on our ongoing progress. Today, our e-com business is stronger than it's ever been across a diverse group of retailers. In fact, last quarter, our pure-play e-com business was up over 40%. And we've achieved this growth and established ourselves as the industry leader in e-com by focusing on many things, but especially operational excellence. We developed a Global 5 language packaging, which gives us the flexibility to share supply across many markets. We also developed all new e-com-friendly packaging solutions. And we've aligned our marketing and promotional calendars around the world with key e-com activation dates, and these efforts are paying off for us. Last year, we had our biggest Prime Day, Cyber Monday and Black Friday and Singles Day ever. And we think about the future of e-com in terms of u-commerce, what we call u-com. It's a ubiquitous world where commerce is always available for immediate consumption. To win in the u-com world, we're enabling consumption, where, when and how the consumer wants to buy. This means understanding how consumers are now shopping across geographic boundaries and merchandising our products accordingly. It involves understanding the differences, some of which are obvious and some of which are more nuanced between Eastern and Western e-com consumers. And it also involves understanding the importance of voice commerce, not just on your home smart speaker, but also on your mobile device, on your TV, even in your car. So while we previously focused on the most relevant keywords to win in search, we're now testing and learning how to win with conversational search and shopping, and these are the type of things that we're doing to keep us a step ahead. Now another key to our continued growth is the optimization of our global sourcing, logistics and quality strategy. Since 2012, we've been executing a long-term strategy to diversify our global sourcing footprint and create a more balanced sourcing portfolio. Back in 2012, we sourced about 85% of our products from China. Last year, it was about 66%. And in the next few years, we'll source 50% of our products from non-China sources. We've also successfully improved our supply chain's flexibility and speed, resulting in shorter development time lines and faster product to market schedules, which is so important in today's day and age. And importantly, all of these improvements are sustainable over time. Now I wanted to finish up this morning talking about the fact that our commitment to corporate social responsibility is a journey that we have been on now for many, many years. In fact, 2019 was our eighth consecutive year being recognized as 1 of the 100 best corporate citizens. And this year will be our ninth consecutive year as one of the world's most ethical companies and we also rank this year at the top of Barron's 100 Most Sustainable Companies in America. In fact, we've made environmental sustainability one of our key CSR pillars. In 2018, we were the first company in the toy industry to offer a recycling program in the U.S. and due to the program's success, we're extending this now to additional markets. We're also pleased to announce today that by the end of this year, we will be carbon negative. Removing more carbon from the environment than we produce at our global owned and operated facilities. And this builds on our previous goal of becoming carbon neutral, which we achieved in 2017. Then finally, we are on track with our industry-leading goal of eliminating virtually all plastic from our packaging by the end of 2022. We are unlike any other company in this industry. An incredibly diverse brand portfolio, a deep vault of brands ripe for story development and a set of capabilities and expertise unmatched in the market. So thank you for your attention this morning. I'd now like to introduce our new Chief Consumer Officer, Eric Nyman, Eric?

Good morning. Today, I'd like to build upon John's discussion of our brands by talking about how our teams are set up to drive innovative approaches across everything we do. We call this approach our 5 pillars of innovation. Let's start with content to commerce innovation. We've had great success through our blueprint that Brian presented at driving strong toy and game sales by leveraging great content. As consumer viewership continues to migrate to different types of platforms, we have to ensure that we stay well ahead of the curve. As we think about 2020, there are several significant entertainment pillars that will be driving our business. The Frozen 2 home entertainment window in Q1 is the first such opportunity. Next week, the Frozen 2 Blu-Ray and DVD is available, and we have significant omnichannel merchandising plans behind it. Furthermore, the fall season will also bring more Disney led activations that will help keep Frozen 2 products from Hasbro, like the Ultimate Arendelle Castle at the top of holiday 2020 wish lists. And the big news doesn't stop there. In addition, Disney also has theatrical launches for Mulan on March 27, and Raya and the Last Dragons slated for Q4, all of which Hasbro will support with strong product launches. Another example of content-to-commerce launching this spring is demonstrated in our partnership with Universal. TROLLS launches their second theatrical release, TROLLS World Tour, premiering April 17, 2020 in the U.S. Our collection of toys and games just launched in January, and this all new line offers something for every TROLLS fan, delivering innovation across price points, starting with our new Tiny Dancers collectibles, movie-inspired dolls and play sets as well as TROLLS like we've never seen before in fashion dolls and the adorably irresistible Toddler Poppy and Branch. Another great example of content-to-commerce is demonstrated by Hasbro's own POWER RANGERS brand. POWER RANGERS Beast Morphers Season 2 is set to premiere February 22. The show features new Ranger gear, new Beast-X Mode powered up suits and the epic new Beast-X King Zord, all of which will be featured in our 2020 product line. Marvel continues to take a leadership position with Hasbro in how they approach content-to-commerce. Marvel is taking their content to multiple platforms in 2020. And Hasbro is poised to drive sales on all of their efforts. These culminate in the fall of 2020 with Marvel mania where Marvel is set to launch a new multi platform, free-to-play Avengers video game, have home entertainment on their spring movie launch of Black Widow, launch their new theatrical blockbuster, The Eternals, and on the Disney+ platform launch 2 new important Avengers related titles, Falcon and the Winter Soldier and WandaVision. Hasbro has an exclusive array of products to support all of this incredible content across our channel strategy to drive sales to all of our excellent retail partners around the world. Our content-to-commerce strategy for Ghostbusters starts with the fans. The franchise has a highly engaged fan base. In this quarter, we're building on teaser and trailer content that supports the new movie to activate our fan base and get them excited about the launch of our new collective products. We'll be offering them opportunities to preorder product in advance of those hitting the shelves. As we move into the spring and summer, we'll leverage the Ghostbusters: Afterlife theatrical launch to inspire Kids as we drive them to our line of products that includes new movie characters and new movie gadgets and gear, and we'll continue that momentum through this fall using the Ghostbusters: Afterlife home entertainment launch to launch new ghosts, gear, and of course, goo as the centerpiece of our line. Capping off 2020 is an event that all Star Wars fans are waiting for. The launch of The Mandalorian season 2. This content-to-commerce initiative from Hasbro in partnership with Lucasfilm is a significant opportunity for us in Q4 to celebrate the success of this great show on Disney+ with all new characters and, of course, The Child. This show marks a pivotal point in content to commerce for both Disney and Hasbro, as it provides an incredibly strong proof point that streaming content can drive significant merchandising opportunity. Our excitement is in large part based on this character that's become a pop culture sensation. Our initial products in support of this character have exceeded our expectations. We pride ourselves at Hasbro in treating partner brands like our own, and we embrace this philosophy with The Child product launch, which we executed from concept to market in 20 weeks, highlighting our speed to market and efficiency in execution that we are known for. Our second area of significant innovation lies in our approach to influencers. Let's take a look. [Presentation]

As you saw on the sizzle, our brand teams and our brand publicity teams have done a great job creating a world-class influencer approach in applying that best innovation to the NERF brand. In 2019, NERF launched the Ultra One, our best technology innovation ever, featuring the patented Ultra DART, NERF's furthest flying dart at 120 feet. This brought unimaginable performance to the NERF aisle. Through a mix of incredible influencers, topical content and strong retail placement, we drove an incredible launch, and we're expanding the Ultra One around the world this year. Let's take a look at this amazing blaster performance live. [Presentation]

With NERF, we don't see the business we're in as simply blasters and darts. We're in the business of creating leading-edge, innovative technology, battle-based excitement that invites everyone to play. And through our incredible influencer content, we're getting kids excited about this in totally new ways. And it doesn't end there. This March we'll be expanding our NERF Ultra line with even more innovation with the launch of the Ultra Two, featuring our patented dart technology and a fast back reloading 6 cylinder motorized blaster. Throughout the year, we'll be unveiling even more amazing content and products built on core consumer insights, giving consumers everything they always wanted from the NERF brand. Our third pillar is channel strategy innovation, an area that our global team has spent a lot of time with on our region -- with our regional counterparts as retail continues to change rapidly. That retail landscape continues to evolve and projections from Kantar through 2024, continue to show significant CAGR growth in channels like e-commerce, value discounters and within specialty, the fan channel, areas that Hasbro continues to invest in along with our mass retailers. This focus on channel strategy has directly contributed to 2019 being the biggest year in Monopoly history with franchise brand momentum across all channels. The team has spent considerable time with our retailers to ensure meaningful product differentiation from Monopoly across e-commerce, mass retail, the value channel, the fan channel and more. We expect this great momentum to continue with this strategy. Another area of channel strategy innovation involves how we create meaningful differentiation through brand experiences. An example of this is the e-sports arena partnership with Walmart and the NERF brand. Walmart approach Hasbro in 2019 with a new opportunity, bringing e-sports video game centers to their stores. This initiative allows them to get gamers into the Walmart footprint. Walmart called Hasbro to help ensure that they could convert these consumers into customers, and a partnership was born. As Walmart rolls out these e-sports centers, NERF is the only sports action sponsor in the store and online, and offers products for sale like our NERF Fortnite blasters that tie directly into the games that these e-sports consumers are playing. Another focus brand for our brand experiences is PLAY-DOH. Our regional teams around the world continue to build out this brand in immersive and holistic ways with our top retailer partners to delight our consumers for the future. Here's 2 great examples, highlighting the incredible PLAY-DOH experience brought to life in retail environment in both France and Mexico that we're focusing on extending specialty environments around the world. Our fourth pillar is insights innovation. We continue to focus on insights and predictive analytics to find new white space in the marketplace for our products. Although parents continue to be the primary gift givers, accounting for nearly half of all toy purchases, we've seen strong growth in toy sales from other family members, including grandparents, and aunts and uncles. And this is being driven by a trend we've been tracking for a while that we call Family Redefined. One group that we feel is large and underserved is aunts and uncles. How many of you out there, show your hands, would consider yourselves a punk? Probably not many, but at Hasbro we have found groups called pants and punks, which stands for Professional Aunts and Professional Uncles No Kids that play an important and meaningful role in the lives of children they love. They have time, income and a passion for purchasing the best for the kids in their lives. Another large and growing segment we've identified through social scraping and analytics is self gifting. Toys and games for myself have grown by 16% since 2016, reaching $1.6 billion at retail in the U.S. alone. And we know this is largely driven by the fan economy and kidults, which John touched on earlier. Nostalgia is a big driver of this consumer trend in our portfolio of classic toy and games tapped into that consumer need. We have successfully expanded our audience to older consumers for several of our brands. So this strategy to continue engaging all gift givers. Parents to extended families, to individuals buying for themselves with all new and innovative ways to experience our brands is one we'll continue to lean into. Our fifth and last pillar is product innovation. Highlighting our strength in this area, in 2019, 7 of our products have been nominated for U.S. Toy of the Year Awards or TOTYs. Included in this prestigious list is our Ultimate Arendelle Castle from Frozen, the Beyblade Burst slingshot battle set, Ms. Monopoly, MARVEL LEGENDS, our Comfy princess fashion dolls which were originally introduced in Ralph Breaks the Internet, our POWER RANGERS Ultra Zord and from Star Wars episode 9, The D-O Droid. Additionally, in Star Wars, we're thrilled to celebrate our recently awarded KAPi Award, Kids at Play Interactive from CES for our Star Wars Lightsaber Academy products for the best integrated toy in the toy and game category. In addition to our TOTY and KAPi award nominations our adorable Cubby, the Curious Bear received 12 awards globally, including Toy of the Year in France and Belgium, and overall, FurReal Friends ranked #1 in specialty feature plush globally. Driving this incredible innovation is our people. At Hasbro, we have a world-class group of innovators. This team is charged with strategically finding, creating and inspiring, amazing product innovations, which we do by partnering with best-in-class inventors and inventor studios to collaborate on several break frame innovations, crowd sourcing through hasbrospark.com, crowd funding through HasbroPulse's HasLab as well as partnerships to unlock the power of entrepreneurs and give us to exposure to ideas on the cutting-edge of technology and brand experiences. Looking forward, our great gifts for 2020 will be the face of our biggest innovations, some of which you'll see today downstairs in your tour, and some of which we're holding back for a later date due to confidentiality. This holiday season, our youngest audiences will be excited to watch Princess Celestia come to life when you blow sweet kisses with the new My Little Pony's Magical Kiss Unicorn. For PLAY-DOH fans, we have unparalleled expansion as we roll out numerous new types of content compounds from PLAY-DOH, which offers significant upside to our business potential. Additionally, some of our strongest innovations include FurReal Friends, Mama Josie Kangaroo, our first ever FurReal marsupial, along with new items launching from NERF. Another significant focus area for product innovation is within our gaming business. Our strong gaming portfolio features launches this year like Operation Pet Scan, an all-new way to play our Operation game, our Mandalorian Trouble, where kids must save the galaxy with the help of the force, Mall Madness, bringing the classic game back from the 80s into the 2000s and a totally new party game where pingpong meets a trash-talking deer with Deer Pong. For our fans, we have some great offerings, too. Our Marvel fans will become legendary with new Marvel Legends Black Widow collection. G.I. Joe fans, who are anxiously awaiting the new October movie, Snake Eyes, a G.I. Joe origin story, will have an all-new 6-inch figure collection. Star Wars fans will have all new games, vehicles and lightsabers from the Mandalorian. And lastly, the item we've all been waiting for coming late this fall from Hasbro, which debuted on Good Morning America yesterday, the most life like fully animatronic Child ever made, featuring over 25 sounds and movements from the Mandalorian. Let's take a look. [Presentation]

Thank you very much for your time. I'd now like to turn it over to my friend and colleague Casey Collins, our SVP of Global Consumer Products. Casey joined us over a year ago after a distinguished career in licensing from great companies like Lucasfilm and most recently, WWE. We're thrilled to have Casey on team Hasbro. Casey.

Good Morning, everyone. Now I actually understand why Eric's always calling me a punk. So having a robust licensed Consumer Products business contributes to the transformation of Hasbro to a global play and entertainment company. Licensed products and experiences allows us to expand storytelling and fan engagement across multiple touch points throughout the day and helps strengthen brand loyalty. Today, we have over 1,000 licensees in over 60 countries across more than 100 categories that bring our stories and characters to life throughout innovative and engaging physical products. From toys to T-shirts, to wheeled goods, arts and crafts and cosmetics, we have fans of all ages covered. We have begun the integration of our licensing and Consumer Products teams at eOne and Hasbro. We are creating the very best combined team to fully harness the expertise of our people and use our combined knowledge of the industry to drive and leverage the growth of our story-led brands. Globally, we now have the leadership, the new structure, a new growth strategy and a driven team of passionate industry leaders. eOne has traditionally relied on licensing agents to expand their business outside the U.S. and the U.K. Going forward, my team will utilize 25 local Hasbro's offices and eliminate the reliance on licensing agents. This direct relationship with all of our partners is very powerful and will continue to drive further growth. I'm so excited to be working with Olivier and get started licensing out eOne's amazing properties. Peppa Pig, my personal favorite, is a global sensation on both the small screen and the stage and has sold over $1.3 billion of merchandise last year alone. PJ Masks, the top rated super hero show on Disney Junior, is now a top 3 preschool toy property. And Ricky Zoom has just picking up speed, already a top 5 show on Nickelodeon with kids 2 to 5, and a wide range of licensed products to be launching around the world next month. eOne's brand and consumer products expertise will allow us to further expand our entire portfolio into new preschool categories, retail channels and digital offerings. Hasbro's consumer products expertise will allow us to expand the eOne franchises into the world of fashion with new and exciting halo programming. Now as we pursue larger, more strategic deals with world-class partners, we will leverage our entire brand portfolio and continue to grow and expand into new categories, new experiences and, of course, new channels. In 2019, our licensed visual gaming business delivered record revenue and profit. Strong performances across our game portfolio was led by YAHTZEE with Buddies!, a top 50 grossing game on the Apple App Store. And in December, we launched a new premium download version of MONOPOLY, bringing the iconic game play experience to life on mobile. In January, G.I. Joe: War on Cobra launch on the mobile to very, very positive reviews. It will be updated throughout the year. And this spring, we launched Scrabble GO, a new mobile game delivering classic Scrabble play. Now content is where our characters come to life and mostly connect with our consumers. Our robust publishing program has allowed us to explore and expand new stories that include war, action, adventure, humor and friendship. Working with many of the world's best publishers, we released award-winning comics, magazines, storybooks, novels and ebooks. Now going forward, impactful promotions will be key to our strategy. By associating our franchise brands with other Fortune 500 companies, we're able to create differentiation, drive consumer awareness and decision-making, create new content and communication opportunities and, of course, grow revenue. Now today, we see the consumers around the world want to watch it. They want to buy it, and now they want to live it. In today's experienced economy, consumers want to live their favorite brands in new and unique ways. Location-based entertainment is a critical category for Hasbro as it activates all parts of our brand blueprint and creates immersive experiences that enhance emotional connections with our fans around the world. The Round Room is a perfect example. eOne's Premier Live Touring entertainment company is currently touring sellout shows for both PJ Masks and Baby Shark. I thought I would wrap up today with MONOPOLY, the #1 board game in the world, which is currently celebrating its 85th anniversary in 2020. The success of this brand is not limited to board play as its powerful iconography translates this powerhouse franchise into a true lifestyle brand. Now as you can see, we are able to activate MONOPOLY across all of our consumer products categories whether it's experiencing a night at our 5-star MONOPOLY Mansion hotel in Malaysia, collecting MONOPOLY game piece at the McDonald's wearing your super comfy MONOPOLY slippers or hitting it big on a MONOPOLY slot machine. The combination of luxury and accessibility sets us up for continued success across all licensed consumer products categories. I want to -- it's my pleasure now to introduce Chris Cocks, President Wizards of the Coast. Thank you very much.

Good morning. My name is Chris Cocks, President of Wizards of the Coast. Before I walk you through our exciting plans for 2020, I thought I'd quickly take you through how -- what we were up to in 2019. Let's start with the video. [Presentation]

Thanks. So 2019 was a record-breaking year for Wizards, record-breaking in terms of revenue growth, with MAGIC: THE GATHERING, releasing 3 of its best-selling sets of all time, and D&D, achieving its sixth consecutive year of growth and record-breaking in terms of fan growth across our tabletop and digital games with Magic: The Gathering Arena being a particular highlight. The launch of Magic: The Gathering Arena was the first important milestone in our digital transformation, and we're pleased to see such strong commercial results and critical feedback for the game. Also in 2019, we accelerated our digital investments with 2 other important milestones. First, the founding of Archetype Entertainment in Austin, Texas, led by gaming industry legend, James Ohlen, former Creative Director of Bioware. And then second, the acquisition of Tuque Games located in Montréal, a hotbed of world-class digital games talent, who are developing our new Dungeon & Dragons action RPG Dark Alliance. Our vision is to be the leading publisher of fantasy games across any platform, from playing at the table with friends to digital games played on mobile, console or PC. Our growth engines are our tabletop games in a network of 6,000 hobby retail stores with whom we partner with to create unique face-to-face branded play experiences. Our digital games with a 5-year slate of exciting brand expanding new releases between now and 2025, and e-sports streaming and entertainment content, bringing new generations of fans to our games and brands. When these growth engines work together, we see tremendous results as evidenced by the performance of MAGIC in 2019. MAGIC is coming off its strongest year ever. All of our key performance indicators are trending upwards. New player acquisition is up, powered by both the tabletop version of the game and Arena. Our viewership on Twitch and YouTube is up, powered by our e-sports investments and tens of thousands of new streamers for the game. Player spend is up as we see digital and tabletop spend being synergistic with one another, and player sentiment is up across all player segments, in particular, among those fans, who play both tabletop and digital versions of the game. Heading into 2020, we're going to expand on what worked so well in 2019. Magic digital and Arena will continue to expand new players. Our tabletop plan will span key player segments from new innovations in booster pack, to secret layer direct-to-consumer premium offerings to expansion of casual and social formats like Commander. Combined, our digital and tabletop offerings will provide deeper engagement that will drive light average revenue per user and audience growth. Specifically for Arena, let's take a look at what we have coming up. [Presentation]

Growth for Arena in 2020 will come from audience expansion and deeper engagement by launching Arena on mobile, the preferred and largest gaming platform of next-generation of gamers, going into beta in China after a successful test in January with our partners at Tencent and capitalizing on the success of our e-sports program by expanding viewership and participation opportunities to our most valuable players. But Magic digital is more than just Arena in 2020. Later this year, we'll be introducing Magic Spellslingers, a brand-new digital, collectible card battler reinventing the genre for the mobile-first generation. Like Arena, Spellslingers is published by Wizards of the Coast and created by our genre-defining design team reimagining Magic for a mobile-first world. Magic Spellslingers is a collectible card battler, where you choose and play as your favorite Magic superhero, AKA a Spellslinger and face your opponent in high energy, fast paced battles. Spellslingers has been designed from the ground up for the mobile-first game generation. It offers tons of customization options to meet every play style, it distills the best of Magic's game play for mobile with bold new category innovations, and it builds on the innately social aspect of Magic by bringing new ways for fans to connect, play together and collect in ways that genre has never seen before. Let's take a look. [Presentation]

Thanks. So in addition to Spellslingers, which, by the way, you can play downstairs in our booth, we continue to expand our digital offerings to adjacent genres. ManaStrike, a strategic tower defense game from our partners at Netmarble, had a successful launch on Android and iOS a few short weeks ago. And later this year, our partners at Cryptic and Perfect World will launch the beta of the free-to-play action RPG Magic: Legends. Digital games are a big opportunity for Wizards going forward and a particular focus for DUNGEONS & DRAGONS in 2020. D&D is coming off its sixth consecutive year of growth, and it really feels like everyone is playing the game from Deborah Ann Woll and Stephen Colbert to the characters on Stranger Things and South Park. The game continues to be etched into the hearts and minds of popular culture. And it spans generation of players from Gen X to Millennials to our fastest-growing demographic Gen Z. D&D also has a massive gaming -- digital gaming potential. The global market for role-playing games on console and PC has reached $12 billion annually. Among the demographic who play these games, 65% have a positive brand awareness for DUNGEONS & DRAGONS. Among the highest of any fantasy IP, whether that's in gaming or general entertainment. And we have 7 games in development ready to meet that demand. The first of those games coming to market is Baldur's Gate 3 is the long-awaited third installment in the hit role-playing game franchise, loved by generations of D&D and RPG fans alike. DG3 is a result of our collaboration with Larian Studios, famous for the critically acclaimed Divinity series of role-playing games. The game is a story-driven RPG that pushes the boundaries of the genre and offers unparalleled player freedom, high-stakes decisions, unique companions and memorable content. Larian will be showing off the game to the public next weekend at PAX East but before entering early access later this year. But we wanted to share with you an exclusive first look at some very early gameplay footage of what promises to be one of the biggest role-playing games of the early 2020s. Let's take a look. [Presentation]

So in addition to Baldur's Gate, we're developing Dark Alliance with our new studio Tuque Games in Montréal. Dark Alliance is a third person action RPG where the visceral combat and road feats of a D&D campaign come to life in real-time on the screen. And no character in the D&D canon is better to Roll20 with than the beloved Drizzt Do'Urden and his legendary companions. The subjects of 35 best-selling novels by Bob Salvatore. As they battle terrifying monsters through the frozen Tundra of Icewind Dale. Dark Alliance offers a unique pickup and play co-op experience designed to delight younger action RPG fans. Here's a first look at actual game play. [Presentation]

So as you can see, Wizards is poised to have a great year in 2020 with digital front and center in our plans. Arena will be aggressively expanding to new markets, new platforms and new formats. Spellslingers will help to expand the Magic brand into all new fan segments with a game custom-made for the mobile gamer generation. Our partners at Netmarble and Perfect World will help us expand the Magic brand into all new genres. Dark Alliance and Baldur's Gate will explode D&D's potential in the massive $12 billion global role-playing game market with one of the most beloved names in fantasy. And that is just the start as we continue to grow our digital portfolio with over 7 titles in development between now and 2025. Here's to a great 2020. Now I'd like to introduce to the stage, Darren Throop, CEO of eOne. Thanks.

Hello, everyone. My name is Darren Throop, and I've been leading eOne for 30 years. I'm thrilled now to be part of Hasbro, and I'm delighted to be with you all here today. I'm going to walk you through a quick overview of the eOne business, why we fit so well with Hasbro, how our unique offering will create even more value for Hasbro into the future. We're involved in every stage in the content value chain from ideation through to getting into the hands of the consumers. We operate in 3 key entertainment pillars, film and TV, family brands and music and live. We develop, produce and sell film, TV and digital content. An example of that would be the eOne title that you see on the screen 1917, an Oscar winning film, and my colleague, Steve Bertram will dive deeper into this area of business in a few minutes. In family and brands, we're able to fully exploit marquee brands like Peppa Pig across development, merchandising, licensing, which allows us to retain both creative control, but also better margins. Led by Olivier Dumont, you're going to hear from him later today as well. Music and live, we have a very diversified music business that includes music production, sales, artist management, music publishing and live entertainment. And here's 1 of our recording artists, Brandy, on the screen. In a nutshell, we've created a powerful ecosystem that allows us to realize full franchise economics on every property we touch. And that truly aligns with Hasbro's approach and their blueprint. Our vision is to build the leading talent entertainment company. We focus on unlocking the value and power of creativity, fully exploiting the best creative content and working with the best talent across the entertainment business. You can see here a few of our high-profile properties and artists. We have iconic preschool brands like PJ Masks and Peppa Pig. We manage the best-selling Americana band The Lumineers. And we produced a critically-acclaimed film Quinton Flynn. We have boots on the ground in every major market, which has served us very well and enables our teams to touch every aspect of the entertainment value chain to maximize the franchise economics of our IP providing an end-to-end service across content development, acquisition, production, distribution and sales. We have over 1,100 employees around the world, and we have offices in 23 countries that you can see here on the screen. Our international sales network extends over -- in over 180 different countries around the world, and we have strong relationships with top existing and emerging platforms and broadcasters, and you see a few examples of those here. With these relationships, we further deepen Hasbro's global reach and scale. I thought I was looking -- I thought it was worth looking back just for a moment today to share with you a little bit about our history. We started as a music retail business, and then we moved into physical distribution. And as our business has grown over the years, we pivoted our strategy to better respond to market fluctuations and consumer demand. From music, we expanded into theatrical film and TV production and distribution. In the early 2000s, we scaled up our operations and expanded it into Europe. Eventually, giving us boots on the ground in every major market in the world. Our entry into Europe also brought us what would prove to be a very, very valuable piece of IP, Peppa pig. It became even more clear to us then that across all of our content, we needed to be more closely involved from the ground up; again, we pivoted our business to focus on owning IP and owning global rights. To jump-start this new strategy, we made a series of corporate acquisitions and strategic investments into premium content partnerships. 2015 was a very big year for us. We rounded our investment in Peppa Pig, and on the heels of the success in the family business, we launched a new preschool series, PJ Masks. We became recognized for owning 2 of the 3 biggest preschool properties in the world, a huge accomplishment that accelerated our commitment to creating lasting family brands. On the film and TV side, we took a controlling interest in the Mark Gordon Company, a Hollywood production company known for such hits as Grey's Anatomy and Saving Private Ryan. That was a turning point and a catapult to our relationships of a similar nature, where we strengthened our position in Hollywood and immediately got to work creating award-winning premium content with the best creative minds in the business, including Steven Spielberg and many, many others. With streaming steadily growing, and we've seen a recovery on the horizon for the music business, we doubled down on owning IP in that space as well. Our teams got to work on launching our next family show, Ricky Zoom, which just got renewed for the second season. Our content is at the heart of everything we do. And our teams' end-to-end capabilities allow us to monetize that IP in many ways around the world. And that brings us to today, what makes us who we are and why we're such a great fit for Hasbro. Our mission, our network, our focus on delivering high-quality content makes us an ideal partner and an entertainment accelerator for Hasbro. One of the great things about this deal is when you sit back and look at the way we do our business and sit back and the way -- look at the way Hasbro does their business, there's so much synergy. High-quality content is the anchor. If you compare it to our combined brand -- our combined brand blueprint with Hasbro, it's easy to see that our end-to-end view and areas of focus are completely aligned. IP has always been at the heart of eOne strategy and with Hasbro's unmatched intellectual property, we can really put our capabilities to great use. We can take their known brands and quality IP combined with the other great projects we're working on and use our expertise to supercharge monetization across the entire franchise. While we have many advantages, led by our talented management team, eOne is a pure-play content company. We aren't beholden to servicing one platform or distributor over another. And we plan to continue doing that, exploiting IP we own to bring the best original content to screens around the world. We'll infuse Hasbro's brands into this content machine, servicing their 1,500-plus brands and bringing new potential revenue streams. We're nimble and we pivot to new business models if and when required. And this ethos lives on in our entrepreneurial spirit. Our end-to-end capabilities are unique in this industry and will serve us well as we quickly integrate with Hasbro and dispatch our teams to deliver more great work. With that, I'm going to throw it over to Olivier Dumont, who leads our family business to expand on what we've talked about here. Thank you.

Thank you, so good morning, everyone. I would first like to introduce myself. I'm Olivier Dumont. I have been leading the family and brands team at Entertainment One for 10 years, taking Peppa from what was a locally successful TV franchise into a global brand phenomenon, and developing the shows, PJ Masks and Ricky Zoom from inception to now a truly global brand. Our mission statement speaks to everything that we do. We want to create everlasting childhood memories for our audience by carefully selecting, crafting and nurturing the very best kids content into global brands. Let's take a look at the showreel showcasing all the brands in our combined portfolio now. [Presentation]

I would first like to start by touching on a few trends currently driving our strategy in family and brand. So premium content is king right now with launches of high-end CGI content over-indexing on, on-demand linear platforms. To illustrate this, the 2 most successful children shows on Netflix in 2019 are the Boss Baby and PJ Masks, 2 high-end CGI series. In the licensing space, retailer differentiation has become absolutely essential, and retailers are focusing on fewer and fewer brands in each segment, which speaks to premium content strategies once again. Fewer and better. Despite recent challenges, China has become the largest licensing market outside the U.S. and partnering closely with Chinese partners has never been more critical in the entertainment space. As new foreign properties are under even greater government scrutiny. So our strategy is to have market-leading brands in each -- targeting each of the key consumer groups, whatever age, gender and taste. So the coming together of the preschool and school age kids targeted brand speaks to this perfectly. It's like 2 pieces of a puzzle, perfectly fitting to complete the full picture. We now have brands targeting every key demographic and many of their favorite play patterns, action adventure for preschoolers and school age kids, lifestyle nurturing for younger and older children and, of course, comedy, which can draw family audiences. So what's our content distribution strategy? It's simple. It's the always-on strategy. And so we want our brands to be on as many platforms as possible at any given time. In most countries now, no single platform can deliver the exposure we need to build our brands. So we are a platform-agnostic company, as Darren said earlier and we take full advantage of this USP. So YouTube, absolutely critical in our rollout plans. We want our brands to be absolutely ubiquitous and these days, if you have a phone, you have our shows available in your pocket 24/7, wherever you are so long as you have an Internet connection. Linear broadcasters have all but abdicated in the face of VOD platform. In a world filled with overwhelming options, parents love also curated experiences for their children, which they can fully trust. This is particularly true for preschoolers, of course, but also for school age children even, again, to a lesser degree. The initial spark, which is provided by linear broadcasters, is still absolutely essential in a brand rollout. And now, of course, nonlinear platforms are continuing to grow even at a much slower pace in the U.S. and the U.K., but kids are definitely used to having their favorite characters and shows available whenever they want, as we know. So how does it translate for our brands? Peppa Pig has become the kids' favorite brand in the world in 2019 thanks to its success in so many territories around the world, the U.S., China, Asia, Europe, Latin America and most Asian territories. YouTube has become critical in the success of Peppa to date. The show has generated up to now 23 -- 20.3 billion views on our official YouTube channels, and so many, many more billions of views of user-generated content on YouTube as well as on-demand platforms in China. The official Peppa Pig channel on YouTube now has 44 million subscribers around the world. PJ Masks is the #1 show for Disney Junior globally and one of the 2 top 3 shows on mostly near-free TV stations in Europe and Australia. PJ Masks is also amongst the top 2 most successful brands on demand in the world alongside Peppa Pig and SpongeBob in 2019. No doubt it will become the most successful brand on demand from this spring onwards when Disney+ launches in Europe. As PJ Masks will be the only preschool show in the world, which is both on Netflix and Disney+. It is finally the second most screened kids program on the entire Netflix platform in 2019. Ricky Zoom is by far the fastest-growing preschool show in the last 6 months. We have never launched a show at eOne with so many premium linear platforms launching globally simultaneously. It is the who's who of best-in-class broadcasters around the world. Nickelodeon or -- and Nick Jr., actually in the U.S., Milkshake and Nick Jr. in the U.K., Youku in China, Super RTL in Germany, Gulli in France, you name it, so -- Ricky Zoom is on it. And more linear and cable networks are also to launch later this year. So we will therefore apply this always-on brand strategy and our multi-platform brand-building expertise to all the kids' brands in the Hasbro kids portfolio as well as to the Hasbro vault properties and because at the end of the day, exposure is what drives toy sales, games and licensed CP revenues. I'm thrilled and privileged to be working on 1 of the most successful lineup of kids' brands in the world. Thank you very much for your attention. And I now have the pleasure of introducing you to Steve Bertram, which is the President of Film and Television at eOne. Thank you.

Good morning, everyone. I'm Steve Bertram, President of Film and Television for eOne. I'm so excited to now be part of the Hasbro family and to be here today to introduce you to our business. The opportunity created by the combination of Hasbro and eOne is simple and extraordinary, to bring eOne's content creation expertise to bear across Hasbro's beloved brands and characters, in order to fuel the consumer affinity that keeps audiences coming back in greater numbers. First, let's start with a quick sizzle reel that shows off a little bit of what we do best. [Presentation]

Never gets old. We believe that the best stories and the best creators shouldn't be constrained by a single platform or a single format. It's our job to deliver to consumers the content they love more often in more ways across all of these platforms. And we believe that together as one Hasbro, we have a competitive advantage as a large and prolific truly agnostic content supplier, selling to all of these buyers across all formats. We're proud to have projects in development or production with every single company on the page and multiple projects with many of them. Our independent approach to accessing entertainment consumers is a significant advantage in an increasingly competitive market, where existing services and new market entrants are competing for the best premium content in order to attract and retain consumers, resulting in an explosion in content spend. And for Apple and Amazon, in particular, we know that the power of entertainment content fuels their broader product strategy. With their massive user bases and the cash on their balance sheets, they can spend as much as they need to in order to compete with Apple and -- sorry, with Netflix and Disney. As competition intensifies, all these companies are chasing the most valuable content favoring known brands, popular characters and looking to deliver original audacious stories that have the ability to cut through and to attract and retain consumers in a sea of unlimited options. Hasbro's staple of well-known franchise brands and characters, combined with our storytelling capabilities, our talent relationships and our agnostic approach to distribution, gives us a significant leg up in the marketplace for high-quality content. eOne is a fully operational studio, with competencies and capabilities to consistently deliver quality content at scale. From early stage development, all the way through release to the end consumer, we bring stories to life. And we help these stories find audiences around the world. Specifically, we have film and television creative teams, enabling full control across development and production. We have executives with rich storytelling experience, physical production capabilities, global marketing and distribution expertise and the shared service infrastructure resources to support all of our activities across all media. Now as part of the Hasbro family, we've hit the ground running and are focused on activating key brands. Rather than just scouting the outside world for great IP, we're now diving into the rich library of Hasbro brands. And we're leveraging our capabilities, our experience in relationships to adapt Hasbro characters and worlds in order to drive value across the brand blueprint. I'm now going to run through how we think about the composition of the eOne film and television slates. We take a portfolio approach across all of our content, working closely with partners to complement our own development slate, and we balance control of worldwide rights with mitigation of risk. We architect our slates a year to 2 in advance and have already begun to incorporate priority Hasbro IP into our content road map in support of the overall brand strategy. So let's begin with film. Our first category is worldwide rights. These are the films that we produce, finance and distribute around the world. A great example here on the page is Guillermo del Toro's Scary Stories, which we released last year in October to over $100 million in global box office. Next, we have our studio partnerships. This is where we work with major studios to co-finance co-produce and co-distribute films in our direct distribution territories with the partner studio distributing in the U.S. and the rest of the world. An example here is Clifford the Big Red Dog, a familiar live-action -- a familiar property based on the best-selling children's book. This will be a live-action CG hybrid film in partnership with Paramount, set to release this Thanksgiving. eOne will distribute in the U.K. and Canada. And through our partnership with Steven Spielberg's Amblin, we've released acclaimed films such as the recent very successful 1917, and last year's Academy Award-winning best picture Green Book as well as commercial successes, including the Girl on the Train and Spielberg's The BFG. Now on to television. Our TV business has grown substantially for us over time and now represents our largest source of content investment. We plan our scripted TV slate in terms of how it reaches the end consumer. The first are series produced for U.S. network broadcast channels and sold internationally through our in-house global licensing team. Examples include the Rookie, starring Nathan Fillion in its second season on ABC and Deputy, a new series starring Stephen Dorff currently in its first season on Fox. We also have premium and basic cable series that air on services like HBO, Showtime and Starz as well as channels like Freeform. Example here, a great example includes Sharp Objects, starring Amy Adams, which premiered last year on HBO to great success. We also produced a high-volume of Canadian content for global audiences. Nurses, which is performing very well in its first season, and just yesterday, Canadian broadcaster Global TV announced a renewal and the start of production for season 2. Another example is Private Eyes starting Jason Priestley, airing its fourth season this year. We also produce feature-length films and episodic television content, specifically for release around the world by streaming platforms. Last year, we produced How It Ends, released by Netflix. And we're in development on a film and television Universe based on the well-known family brand Narnia also at Netflix. We also acquire either global or territory specific film and television rights, in order to balance out our distribution slate. Examples include the Walking Dead through our partnership with AMC, and award-winning and commercially successful films like Judy in Australia and Arrival in the U.K. Now on to our unscripted television business. We have a significant volume of unscripted series, and this slide really shows you the breadth of our network and platform partnerships. We currently have over 30 series in production around the world. They're way too many to mention here, but we're incredibly proud of our significant growth in this business, both organically and via acquisition of companies like Renegade, who produced the very popular series Naked and Afraid and Blackfin, who recently launched the very successful Aaron Hernandez documentary on Netflix. And finally, a quick sample of the quality titles that make up our library and drive continuing value for the company. Everything from Hunger Games to Twilight from 12 Years a Slave to La La Land as well as perennial series such as Grey's Anatomy and Criminal Minds. There's certainly no shortage of great content here. We're adding to this library every year, and we couldn't be more excited about the growth of our library moving forward with Hasbro. So in summary, what used to be separate Hasbro IP and eOne production and distribution capabilities have come together to build the brands, characters and stories that drive consumer affinity. Our development and production process is centered around brand and franchise with a focus on blending continuity and renewal. As always, we are focused on excellence in storytelling, doing the unexpected, consistent execution, creating compelling storylines and characters. And now we're directing our activities around some of the most well-known brands in the world where we're working to create commercial content with a blend of heart, comedy and spectacle. During this period of unprecedented change in the world of media and entertainment, we believe that there has never been a more opportune time to be an independent pure-play content company, controlling global rights, selling to the increasing number of competing buyers and most importantly, building the brands that will excite audiences around the world for years to come. Thank you so much for your time today. I have a great pleasure of introducing my colleagues, Samantha Lomow, President, Branded Entertainment for Hasbro and eOne.

Thanks, Steve. Good morning. We have tremendous opportunity ahead as we scale up our storytelling efforts with eOne. Story-driven content is really the main entry point for consumers into brands, positioning Hasbro to unlock even greater value across our portfolio. Now Brian has talked about full franchise economics in the past, and now with eOne our goal is to drive more revenue streams from our own brands with a greater participation and share of those revenue streams over time. There are 5 areas of focus to our branded entertainment strategy that will deliver growth to our blueprint going forward. In-sourcing of eOne preschool brands into our toy and consumer products businesses, new storytelling to propel our active entertainment brands like Transformers, Power Rangers and My Little Pony, storytelling as a catalyst to reestablish old brands like G.I. Joe to drive new blueprint activation, new storytelling formats to augment all brands, and over time, igniting storytelling to launch new brands. Now first, the in-sourcing of Peppa Pig, PJ Masks and Ricky Zoom provides us immediate growth opportunity for Hasbro toys and games in the preschool category. We're strategically coordinating the exit of select license categories currently in market, and we expect to start transitioning as early as fall '21. Now some products like games and PLAY-DOH will deliver more quickly, and our goal is to optimize our footprint at retail and online across key categories to deliver revenue synergies. We expect to have our first full year of in-sourced products starting in 2022. And longer term, we're excited about the potential for new properties to the preschool portfolio. With our active entertainment brands like Transformers, we'll continue our robust omnichannel storytelling now under eOne to reach each of our demos with targeted entertainment and dedicated product lines. Season 2 of preschool targeted Rescue Bots Academy and Season 3 of Bumblebee Cyberverse Adventures for our core kid demo, and our tent pole, fan-focused animated event this year, Transformers War for Cybertron will debut the first of 3 chapters on Netflix in June. We have an exciting first look at this high-quality animation and storytelling. [Presentation]

The Transformer sets the bar for how our storytelling strategy fuels our blueprint. Across consumer products and experiences like our fully dedicated Transformers land coming to Universal theme park in Beijing, along with digital games, VR experiences and even live entertainment. With My Little Pony, we're reframing our blueprint to return to growth. We're building connections with the next-generation of fans through more modern storytelling across traditional and new platforms from YouTube to our new humor-based series, Pony Life on Discovery Family. And a major catalyst for the reinvention of Pony is coming with our first fully CG theatrical release in fall of '21. This film will introduce all new characters and a whole new look and feel, and we're so excited to partner with Olivier and Steve to revitalize the My Little Pony blueprint for the next decade. With Power Rangers, we've spent the last year laying a strong foundation for our blueprint across the globe with the #1 series and its time slot on Nick, top placement with broadcasters around the world and strong digital engagement. Power Rangers is a multigenerational evergreen brand with a 25-year track record, yet its storytelling has remained largely unchanged. We see immense opportunity to broaden and expand our storytelling strategy with our eOne team, and so more to come with Power Rangers. With vault brands, a long-term entertainment road map is underway to fully unlock their potential now under eOne. This year, we're reintroducing G.I. Joe by reengaging fans with classic expressions in digital gaming, publishing and toys, leading up to the October 23 feature film release, Snake Eyes in partnership with Paramount. The film will be an origin story for Snake Eyes to bring new and latent fans back to the franchise. We're currently in production in Japan with the -- and the filmmakers put together some early footage to share with you today. You'll notice some of the scenes look a little unfinished. That's because they are, but you'll get a great sense for the level of action and excitement being captured, we kindly ask that you put your phone down. [Presentation]

Now we're also in discussions on several exciting opportunities to amplify our brands through new content formats, with several unscripted toy and game shows already in development. And as you can imagine, the unscripted teams at eOne are having a lot of fun diving into our rich portfolio of IP. And finally, we see new brands as a significant area of opportunity for our company and part of our longer-term strategy to grow our blueprint. We look forward to sharing more updates with you as we solidify our plans. And now I'd like to turn it over to the one and only, Debs.

Well, thank you, Samantha. I can't beat that introduction. Good morning, everyone. We're very happy to be here today to share with you our outlook for Hasbro. We're trying to answer all the questions we've been receiving, but with less than 2 months together, we're still finalizing our plans. In 2019, Hasbro delivered on its revenue and operating profit objectives, including revenue growth, absent FX, of 5%, adjusted operating profit growth of 12%, and adjusted EBITDA growth of 14%. We exceeded our goals for Europe, growing revenues 4% absent FX and increasing adjusted operating profit more than 3x. We drove revenue growth in new areas with a 22% increase in the entertainment, licensing and digital segment and made investments in new digital gaming experiences. And we invested for future growth with the acquisition of eOne. Importantly, we believe we can grow Hasbro's underlying revenue, operating profit margin and EBITDA again this year. The team showed you how we view the drivers of that organic growth through innovation in toys, licensing and gaming. As we've said for many years at Hasbro, we believe revenue growth should come with profit. Our investments in digital gaming go beyond product development and depreciation of costs we've capitalized in the past to develop Arena. But include the teams we've put in place to continue to grow, as Chris highlighted for us earlier. Had we not made these investments in the future, while delivering on our objectives last year, our operating profit margin would have been just over 15%. eOne has publicly stated that they were changing their strategy to invest in fewer film projects and focus on entertainment, which was more impactful and more profitable. Darren, Olivier and Steve illustrated how they've built and are implementing that strategy. For 2020, we'll reflect eOne as its own reporting segment in our public reporting. Over time, Hasbro's entertainment revenue will be fully reflected in that segment. And as we begin in-sourcing toy and game sales in late 2021 and 2022, you'll see that revenue begin to be reflected in our geographic commercial segments. We're still finalizing the close of our opening balance sheet and restating eOne's 2019 P&L for the calendar year-end. As a reminder, eOne was a U.K. March year-end reporting company. They weren't required to do a calendar year-end, hard close under U.S. GAAP. The 2019 eOne results we're showing you today are, therefore, preliminary and subject to change as we complete our closing process. But we wanted to give you comparability to model with. We believe our combined company can grow at mid-single-digit CAGR over the next few years as we come together with eOne and begin to use our retail relationships and geographic reach to further drive our brands. As we develop content from IP and Hasbro vault, we believe we can grow beyond that. And we believe that we can grow EBITDA while we do that. Over the coming 3 years, we'll begin to achieve the synergies we've previously spoken of. We remain on track to achieve cost synergies of $130 million by the end of 2022. We believe we can exceed those synergies, and we'll update you on our guidance as we progress through our integration. Synergies in 2020 are expected to be minimal and to be approximately $35 million to $40 million by year-end 2021 and be $130 million by the end of 2022. To combine our companies, we expect to incur onetime costs. These include $65 million to $70 million of cash costs, consisting of $25 million to $30 million to achieve the synergies, $25 million of integration costs and $15 million of acquisition close costs. Approximately 2/3 of this expense and cash outlay is expected in 2020, with the remainder in 2021. We also expect $70 million to $75 million of noncash expense in 2020, consisting of eOne's stock compensation that was accelerated at the close and paid for as part of the share transaction. But under the accounting rules, we have to run them through the income statement. The remainder of the total relates to retention grants for key employees. As we complete our valuations and purchase accounting over the coming year, there may be further items impacting our opening balances, our expense estimates and the guidance we gave today. We'll highlight these changes as we progress through 2020. Hasbro has historically been impacted by fluctuations in foreign currency as will eONE go forward. Revenues for the combined company for 2019 were made up by the currencies reflected on this chart. At year-end, the rates we saw in the euro and throughout Latin America, were below where they were in the early part of the year. We expect those currencies to stay at these lower rates. Based on the currently planned timing of releases for MAGIC: THE GATHERING and DUNGEONS & DRAGONS that Chris spoke to earlier, combined with the major merchandising events for Frozen 2 and Star Wars at the end of last year, we expect the cadence of revenue and EBITDA in 2020 to be broadly similar with 2019. The coronavirus is impacting our teams in China and Hong Kong, and our thoughts are with them and their families during this time. We are working to mitigate the impact of our manufacturing partner factories being closed longer than anticipated, as well as to reschedule the shipments we've not been able to make. To date, the impact to our business has been small. However, the longer it takes to contain the virus, the greater impact it will have on our business. We do expect this to impact our first quarter. However, this is a historically smaller revenue quarter to us. Should the situation extend longer than the first quarter, we'll update you on the estimated impact with our Q1 earnings. As we think about our revenue go forward, the costs directly related to earning them are in 2 primary streams, Hasbro's traditional cost of sales as well as program amortization. You'll see this important line move up in our combined income statement. We believe that Hasbro's underlying business will have cost of sales as a percent of revenue that are slightly lower than our 2019 levels. This is due to the mix of brands and revenue streams expected for 2020. As we've stated, our Entertainment, Licensing and Digital segment has a much lower cost of sales compared to our toy and game product. As this segment grows, it has a positive impact on this line. In addition, based on where we see labor and commodity costs heading into the market, we do not expect significant cost pressures in 2020 that we're unable to reflect in our pricing. As I mentioned earlier, this could be impacted by the ongoing effects of the coronavirus on our manufacturing and shipping base out of China. Content spend is a key driver for revenue in eONE's business and has been reported in the past in their cost of sales. In the past, this spend was greatly made up of acquired content. However, in recent years, it's been growing to a higher percentage of eONE produced content. As Steve set out for us earlier, this includes scripted and unscripted television content as well as film. For scripted content, cash spend generally occurs 12 months in advance of the sale or distribution of the content. For unscripted content, most of the spend is in the same year the content is sold and aired, often only taking 2 to 4 months from start of production to airing. As Brian, Darren and Steve have spoken about, the channels for distribution of content are growing. The purchase of and desire for quality content is growing. And eONE and Hasbro are well positioned to take advantage of this growth. All program production, whether animated or live action, television or theatrical will be managed by eONE going forward. Their expertise in business acumen as well as their relationships with key talent and the ability to leverage their vast music library and expertise will return greater franchise economics to our combined company over time. In 2020, we expect to produce over 750 hours of TV content. Our investment includes animated content for Peppa Pig, PJ Masks, Ricky Zoom, My Little Pony and Transformers. For 2020, we expect spend on content to be approximately $675 million to $750 million this includes acquired content as well as investment in production of approximately 75% for TV, 20% for film and the remainder for music and other content. With eONE's recent acquisitions, more unscripted content is being produced and delivered than in the past, and as we anticipated prior to the close. Content amortization or program production expense is expected to be between 9% to 10% of revenues. As I mentioned earlier, we haven't completed final valuations for the acquisition. And as we do so, this amount may change, and we'll let you know of any changes to this assumption during the year. Combined, our cost of sales and program production amortization, deliver a gross profit of about 60%, which is consistent with 2019. eONE utilizes production financing, a well-established, low-risk and low-cost method to finance the creation of content IP. In case you are not familiar, in a production financing model, a significant proportion of the production budget is secured before green lighting any project. If a project doesn't achieve the hurdle rate, which for eONE has historically been between 75% to 85% of the cost, they move onto the next projects. For example, a TV show from the development pipeline is pitched and sold to domestic networks before production takes place. If the networks like the proposal, broadcast contracts are signed, committing the network to pay for the rights on receipt of the finish show. Typically, North American networks are approached first. Broadcast commitments can be supplemented by widely available tax credits or production incentives. These contracts together can be used to secure a financing. All production financing, cash flows and production activities are ring-fenced in production spend and nonrecourse special purpose vehicles. The risk is between the banks and the networks not eONE. Once in production, the remaining budget is initially funded from the company's balance sheet, but then offset against continuing international sales of the show to overseas networks, or SVOD platforms through eONE's global sales presence. Once the show is delivered to the network, payment is triggered, and eONE uses this revenue to repay the production financing. Importantly -- most importantly, we retain all the underlying IP rights to the content. So once the network will broadcast the show according to the terms of their contract, which is usually a territorial exclusive 3- to 5-year period, the rights revert back to eONE for future monetization. We expect to use this type of financing for a portion of the investment in content going forward. For the underlying Hasbro business, we expect our franchise brand revenue to be greater than 50% of Hasbro's underlying revenue. We are excited about the home entertainment window for both Disney's Frozen 2 and Star Wars: The Rise of Skywalker. We believe both properties can generate Hasbro related revenue roughly in line with 2019. We're also excited for continued entertainment from Disney+ and the Marvel franchises in addition to Universal's Trolls and Columbia Pictures Ghostbusters. However, given the strength of Hasbro products related to Marvel's Avengers and Spider-Man: Far From Home in 2019 as well as the success of BeyBlade, we anticipate that partner brands will be a lower percent of our underlying Hasbro revenue in 2020 but remain between 20% to 25% of total Hasbro underlying revenue. For eONE business, their quality content revolves around talent. Royalties and participations to that talent are a big part of their business. This, combined with revenue from Hasbro's partner brands, leads us to expect royalties between 10% to 11% of revenues in 2020. Looking at a pro forma of the combined companies, this compares to a royalty rate of 10.7% in 2019. Based on our projected revenue mix, we expect advertising rates to be around 9% of combined revenues for the full year 2020. The efficiencies we saw in 2019 are expected to continue as we advertise on different platforms, the absolute dollar amounts will fluctuate as we introduce new digital games and Hasbro IP-related content. Overall, for the next few years, we see advertising remaining between 9% to 9.5% of combined revenues despite the dollar fluctuations. Innovation in toys, gaming, and what the future holds for play and entertainment remains a critical factor to our business. We bring first-to-market innovation in play patterns to our owned and partner brands and resulting in Hasbro outperforming competitors in several categories. As Chris spoke to earlier, we have several digital games being worked on currently. Much of this cost goes through the product development line until we've reached a stage where we can begin capitalizing them. When the game is released, and we began collecting revenue, the depreciation of the capital cost runs through the admin line in SD&A. We believe our investments to date have provided very good returns to our shareholders and set us apart from traditional toy and game companies. We'll continue investing for the future of Hasbro, and we expect these investments to be leveraged from higher revenues as more games are introduced. For 2020, we expect product development to remain in line as a percent of revenue to 2019's combined pro forma of around 4.4%. Within SD&A, we believe the cost savings we saw in Hasbro's underlying business to be sustainable. While we will continue to make investments to grow the skill sets we need for digital gaming and be able to sustain running those games, we do not expect the increased levels that we've seen in the past. Depreciation of new games will fluctuate depending on the number of new releases during the year, but we'll have revenues to go along with those costs. As we move towards 2022, we'll also begin to see the impact of synergies on this line, more so than others. Somewhat offsetting these savings is the impact of stock-based compensation, due primarily to the impact of Toys "R" Us going away. The targets we set for Hasbro were not met in the last few years. As we expect new targets to be met in the future, stock-based compensation expense will increase over the next few years. Overall, we expect that the combined company will have SD&A expense of just under 21% of revenues in 2020. And that's moving closer to just over 20% by 2022, as we start to realize the bulk of our synergies. Intangible amortization of the pro forma combined company in 2019 was 1.8% of revenues, it's currently expected to be approximately $110 million in 2020. This has not been adjusted for any increase in amortizable property rights in connection with fair valuing the eONE assets as part of the purchase price accounting. As we complete the process, this amount is likely to change. We'll update you as we progress. As we sold shares in connection with the acquisition of eONE, our share count is higher than it's been in the past. Given the shares outstanding at year-end and the assumed issuance of shares under compensation plans, we expect an average diluted share count this year of approximately 138.6 million shares. We expect that the additional interest in share count will have a negative impact of approximately $1 on what Hasbro's earnings per share would have otherwise been projected in 2020. As we have $300 million of debt due in 2021, we expect this impact to decline slightly as we head into 2022. We continue to expect the deal to be accretive to adjusted EPS this year, excluding onetime transaction costs and purchased intangible amortizations. So this slide summarizes all the things that I've discussed so far. Now let's talk about the tax rate. eONE distributes content and earns its profits in jurisdictions, which differ from Hasbro's stand-alone business. Based on our current projections of where the combined company will earn its profits as well as the differing tax treatment of certain acquisition-related items, we expect an underlying tax rate for 2020 of approximately 21%. Given the uncertainties in tax law changes and the finalization of the opening balance sheet, this rate could change by plus or minus 2%. The U.S. tax treatment of interest related to acquisition debt is also having a plus 1% impact on our combined underlying rate. As we deleverage over the coming years, we should reduce this impact. Hasbro has a long history of returning excess cash to our shareholders. Over the past 10 years, we've returned $4.7 billion through dividends and share repurchases. Our historical dividend payout as a percent of earnings has been among the strongest in our peer universe. We continue to believe in the value of returning excess cash to our shareholders, but we've updated our capital priorities in the near-term as we focus on achieving our gross debt-to-EBITDA targets over the next 3 to 4 years. Our forecast remains to generate $600 million to $700 million operating cash flow per year on average, and we expect capital expenditures in the range of $160 million to $180 million for 2020. Our capital priorities remain largely the same with one important addition. You've heard from the teams today on how we plan to invest in the business to drive long-term profitable growth. Next, we plan to return excess cash to our shareholders. Our dividend in 2020 is expected to be approximately $375 million and reflects the 10.6 million shares issued in our 2019 equity offering. We are committed to maintaining the dividend. And last week, our Board approved the next dividend payment of $0.68 per share, flat with last year and payable in May. Also, we suspended our share repurchase program as we focus on returning to a gross debt-to-EBITDA target of 2 to 2.5x over the next 3 to 4 years. We're committed to our goal of maintaining an investment-grade rating, as this allows us the flexibility to keep investing for future profitable growth. This is reflected in our third priority of strengthening our balance sheet, which we've added to our capital priorities going forward. We are approximately 8 weeks into the integration of Hasbro and eONE, and we're finalizing our strategic plan as a combined organization. This includes achieving our gross debt-to-EBITDA target. As I discussed earlier, we don't expect net synergies in 2020. As a result, we're not planning to make meaningful progress toward delevering this year, and our expected interest expense for the year is approximately $210 million. Our plan is to use most of our free cash flow after we pay our dividend to reduce debt. And over the next 3 to 4 years, through a combination of debt reduction and EBITDA growth, to achieve our target debt levels. This morning, the team outlined our strategic growth priorities, including how the addition of eONE makes us stronger. We showcased our ambitions in consumer products, gaming and entertainment, and I've outlined how this translates into revenue growth operating profit margin and EBITDA improvement, strong cash flow and our plans to reach our debt targets over the next 3 to 4 years. Today, we've heard about the power of bringing 2 driven, innovative and forward-thinking companies together. We've talked about what sets us apart from other companies in this space, what makes us stand out and what makes Hasbro unique. We've heard from people, who don't just talk about what they can achieve, but from teams who have made success happen. We hope today has helped you see what we believe the power of the combination of Hasbro and eONE's profitable and growing businesses with one strategy, one focus and one blueprint, stands to set us apart more and paves the path to adding incremental revenue and profit potential beyond the medium term. So now we are very happy to take your questions. Brian and John will join me on stage. And if you raise your hand, a microphone will be brought to you. Please wait for the microphone as we're being webcast today.

So when you receive the mic, if you could state your name and your company affiliation before you ask your questions, we'd appreciate it.

Great. Any questions? It's hard to see.

This is Tami Zakaria from JPMorgan. My first question is, you commented you expect 2020 combined revenues to be above $6.2 billion. So could you comment on the mix of that coming from Hasbro core and Entertainment One? And secondly, what's the underlying revenue growth outlook for the Entertainment One business? I'm curious if this is above the core Hasbro or in line with that.

Yes. So as we've said, we had medium-term guidance and objectives for Hasbro's underlying business. And it has been historically low to mid-single digits, and we believe we will achieve, again, those mid-single-digit revenues growth for Hasbro. As we go forward, you're right, eONE's growth will be a bit higher than that. It's probably mid- to slightly high single digits over time. This year, we've said, overall, we expect Hasbro and eONE together to achieve mid-single digits. But obviously, there's some variability there. So as we move forward, clearly, we're adding in pro forma. And you saw the numbers for 2019, it was $5.9 billion. So it gives you a sense for the size of eONE relative to Hasbro's revenues for 2019. As we go forward, you're right. Clearly, eONE is in areas of the business that have continued to grow. There's great opportunity as we add Hasbro IP over time. You see the contributions in EBITDA and profitability as we look between the family brands business. It's incredibly profitable and also an opportunity to connect directly to audiences and consumers of young ages around the world and their families. And then, obviously, Steve and his team have run a great TV and film business that we believe, as we import more Hasbro IP, gives us the opportunity to drive income streams across the entire brand blueprint as Samantha Lomow outlined for you. So we really are looking forward to the combination. We're 8 weeks in, it's amazing to see what the teams are already doing together as they build the entertainment plans. Question? Just raise your hand if you wouldn't mind. Thank you. If we can get a microphone down.

Arpine Kocharyan, UBS. Do you have a greater understanding today about synergies that you plan to drive from eONE versus 3 months ago. And then as we look at the franchise brands blueprint. Can you talk about some of the drivers of your core franchise brands as we look into 2020?

Sure. Deb, you want to talk about where we are with synergies. And then, John, maybe you'll cover franchises.

Sure. As we're 2 months into it, we have a much better view to how we're going to achieve the synergies. In addition to believing, as we stated today that we can exceed those synergies. We're not ready to commit to a number today because, again, we're 2 months in, but we have much greater visibility of how we'll achieve it, and the integration has just gone great. As we said earlier, we felt the cultures are so close in our companies. It's made it so much easier to begin to make those plans and drive those synergies forward.

Okay. In terms of our franchise brands, as Deb mentioned, about 50% of our revenue, and we've always said that these brands will grow over time, not every year, every brand will grow. But as we look to 2020, clearly, Chris presented a compelling view for MAGIC: THE GATHERING, and we have a lot of energy and excitement around new things happening at Magic. We've talked about NERF returning to growth in 2020. We've talked about PLAY-DOH having a growth year in 2019 and that continuing into 2020. And of course, we're so excited about partnering with Olivier and the team on reimagining My Little Pony and taking that forward into the future. And then we talked about BABY ALIVE, also globalizing that brand. So those are the types of drivers that we're going to continue to address in our franchise brand business, which, of course, are above company average and profitability, and we'll continue to drive those around the entire blueprint. Now with many of those, as we talked about, story does drive it. So MAGIC: THE GATHERING is a story-driven brand as is Transformers and NERF, obviously, the social influencers that we've talked about. But we're executing all of our franchise brands around the entire blueprint in licensed consumer products, Consumer Products, entertainment and digital gaming.

Great. Okay, question. Yes, please. About a couple of rows up, Felicia.

Felicia Hendrix from Barclays. Deb, I wanted to know if you could touch it first upon your continued view that the transaction will be accretive this year, with minimal synergies, incremental interest expense, the higher share count. Can you just help us think through where the accretion is coming from this year?

So certainly, as we said, bringing these 2 businesses together. We're bringing together an existing profitable business with another existing profitable business. So when we think about as we model out, Hasbro and where we would stand before. Absent those transaction costs, we believe that it will still be accretive. And we haven't highlighted the amount of accretion yet, but hopefully, with some of the line items we talked about, as you do the math, you can see that as we bring the companies together, it will be accretive. Now that being said, we do think that there will still be changes to the P&L. So -- and because we haven't finished the purchase price accounting and all the fair value of the assets work. It's going on right now. It's just not done yet. After 8 weeks, we had a year-end to close and a few other things get through. But -- and we're still getting through.

Exactly. I think that's why we're here.

So by bringing those plans together today, we think the amortization will adjust. We'll probably see some adjustments to the content amortization line. But right now, this is the best guidance we have. With all that, it's still accretive to what our projections were prior to the acquisition, absent those costs.

That's helpful. And then, Brian, just getting back to your comment earlier in terms of the growth trajectory of eONE. This year, in the middle of the year, it was -- eONE provided an update in terms of their first half fiscal growth. Well, I guess they're slowing growth. We know this is a challenging year. Just the growth prior to this year was actually, what I would call, nice and robust. Now maybe kind of a transition year. But going forward, the way that you talked about, the growth was a little bit lighter than I would have thought. So I mean, as we think about that historical growth rate, maybe over the past few years, exit this year. Kind of what's the trajectory getting towards the growth rate that you talked about, which is a little bit lower?

Yes. Look, I think as we've seen their plans come together, we're really admiring the growth rate and the opportunity to grow faster. We wanted to start here today with a sense for just how the businesses come together and the sense for the -- what the combined entities look like, we think starting with an expectation for high single digits growth for eONE is fine and good and strong and that yet, they have great growth opportunities beyond that as they begin to activate more IP as they look at new opportunities as we see the great performance of several of the properties that they had already invested in come to life. And then as we begin to activate Hasbro IP, first and foremost, it'll happen in unscripted because that can happen faster and then into scripted television and then into films over time. So we feel like we have a really good start out of the starting gate. This is only a start, and we absolutely believe that they can get back to the historical levels of growth that we've seen from them. And in fact, it gets supercharged. By the fact that we add Hasbro IP, so we begin to drive all the other income streams around the blueprint. The engagement in consumer products and toys and games, location-based entertainment, and by the way, music throughout the morning, you heard a lot of music, and a lot of that was eONE music. So the opportunity for us to bring all of that together is really so apparent, and it's really a powerful starting point for us in 2020. Okay. Down here, please. First row, please.

Tim Conder, Wells Fargo. A couple of questions here. Wizards of the Coast. When -- just maybe a little clarification. When do you anticipate the flow-through to start to accelerate on -- into the -- in EBITDA, we're talking 2022, 2023, from an investment -- Deb's grinning there. And then on the Disney extension. Brian, any -- how long was the agreement extended for this morning beyond 2020? And then finally, maybe a little bright spot out of a bad situation with coronavirus, given the industry is a little heavy on inventory coming into the year as a whole. Could that actually, if we don't go beyond another month or so, actually be a benefit if some of the delays of product, even though it would actually weigh on Q1?

I'll ask John to answer the third question in a minute, that you just asked. Let's go back to Wizards of the Coast. First of all, Wizards of the Coast enjoys superior operating margins to a lot of our business other than our digital gaming business in third-party and our Consumer Products business, which are also highly profitable. Taken together, you look at the Entertainment, Licensing and Digital business, we achieved nearly a 23% operating margin. And yet, we were also investing in real-time in all the games that Chris described. We view that as highly accretive. And the fact is, over time, as we continue to scale these businesses. And for example, as Arena goes out, not only in mobile, but on to Spellslingers into China and to new audiences. Clearly, you start to get the economies of scales in these businesses. But we think this investment is absolutely worth the return. And we're seeing that kind of return. So yes, will we get back to that underlying Wizards of the Coast kind of operating profit. You look at the tabletop business today, as I described or the business taken together for MAGIC: THE GATHERING or Wizards of the Coast, it's nearly 3x the company average operating margin just for the Wizards business. And that's great operating margin and a great return, and it's worthy of investment that takes us to a future state that says we can double the size of that business. Because for our stakeholders, that's a very valuable addition to the rest of our portfolio. And you think about what the company then looks like in 5 years' time as we accomplish that objective. So the second question, do you want to take that?

You took the one you're going to have me do.