Archer Capital eyes Funtastic, which acquired Madman Entertainment in 2006

--------------------------------------------------------------------------------

Australian private equity group Archer Capital is spearheading a leveraged buyout of Funtastic Ltd., a toy company that is the corporate parent of Madman Entertainment, Australia's largest anime and manga distributor. Funtastic's net profits for the last year have dropped 60 percent, and its share prices have been falling since the beginning of 2008, from AU$1.18 to as low as 36.5 cents a share in March. Shares are now valued at 70.5 cents a share, increasing once Archer's "non-binding indicative proposal" to buy the entire company at 80 cents per share had been made.

Recently, Funtastic's managing director, Tony Oates, has reportedly been considering selling off the company's non-toy assets, while retaining its core business. Madman Group, which Funtastic acquired for 34.5 million Australian dollars (US$26.5 million) in 2006, is its major non-toy division, although Funtastic also has an interactive entertainment/videogame distribution unit.

Source: The Age

---------------------------------------------------------------------------------

So.........is this good or bad?

I'd have to see a financial statement from Funtastic detailing their revenue sources before I made an opinion. It doesn't bode well for Madman if they are willing to divest themselves of the non-toy aspect. Maybe it's time Madman realised their business model is flawed, what with the poor quality merchandise they expect us to pay a fortune for.

Here you go:

http://www.funtastic.com.au/docs/pdf/agm//581278.pdf

That is the most disturbing cover page for any financial report I have ever looked at, based on that alone, they are screwed.

I couldn't have said that better myself...

What are the chances that pic was taken by that artist in the news right now?

Holy crappe, that cover pic is truly the work of the devil. I applaud Funtastic for displaying the sheer banality of their corporate spirit right up front.

And in other news: will Madman survive this? Considering my opinion of the quality of their releases, I am feeling slightly unmoved.

My eyes have been scarred so badly.

Time for a small lesson in Accounting and for me to demonstrate that I actually learnt something at university. Despite the increase of DVD sales by Madman Entertainment, the amount of money paid by Funtastic was higher that the value of the assets owned by Madman (property, inventory, cash etc). This has generated an intangible asset (i.e. doesn't physically exist) for Funtastic called "Goodwill" which is simply how much you expect the company to be worth through retained customers, future sales, etc. The problem with Goodwill is that it must be depreciated over a period of no longer that 20 years, causing losses to appear on the financial statements. When purchasing assets they are rarely expensed in that financial period and the expense is spread over the years to reflect the usage of the asset. As Funtastic paid a Goodwill value of over $20 million for Madman, they will be showing losses of over $1 million every financial year until it is used up, which usually leads to a rather negative financial report despite nothing particularly damaging to the company happening.
Basically, Madman should live so long as rising fuel costs and interest rates don't interfere with sales, although their quality still needs work.
If Bazza leaves a reply along the lines of "too long; didn't read", he's getting his account suspended for a week.

If the Australian economy in general doesn't suffer then sales for Madman should be okay. Still, quality of product can definitely improve.

The recession in the US has caused havoc for many of the companies there. Geneon bit the dust, Bandai is being taken over by its parent company and ADV is on the verge of collapsing.

Oh speaking of Geneon, I found out why Higurashi and the like have not been relicensed. Geneon have not sold the rights to those series and those rights last for 20 years.

Geneon are hoping to farm out the titles to other companies whilst still retaining licence control. Which will likely happen when it starts raining on Mars.

For a large part, Geneon actually helped pay for the production of said titles, so they are well within their rights to do what they like with them. Most of their financial difficulties had very little to do with the American arm of the organisation, which was operating at a reasonable level of expected loss from esoteric titles whilst making a profit on higher-profile ones, but the parent company in Japan made some stupid decisions (including their cooperative deals with Dentsu, who are really to blame for pulling the plug on Geneon USA) and voila, you have the situation that exists, now.

It must also be said that the recession in the US isn't helping. Sales of dvds, like all luxury items, have plummeted across the board. Anime isn't the only thing being effected, but it has hit harder because it isn't mainstream, and because most are series that cover several volumes, some of which aren't complete, yet, which helps put people off buying. Sales of complete boxsets have not suffered so badly, but their sales were small to begin with.

Madman seem to still be doing well, in comparison to other brands such as TNT which has failed or Siren visual which has struggled to gain a sizable market share in the Australian market place.

Madman also deal in other areas than just direct hardcore anime, madman is increasing its reach to mainstream TV with increasing timeslots on Foxtel, ABC2 and other avenues. Madman runs their asian eye releases which is aided more so than ever since the Quality of Asian cinema is increasing plus the power of DVD allowing multiple subtitle or audio tracks.

Also starting up in 2006 Madman have started to work on local Australian releases, one of the popular ones including Kenny.

To be honest, i think madman still has a way to go, but i think that they will be here for a good time yet!

Madman is now shown as the leading independent film company to all multimedia students as well.