UPDATE 2-Activist Livermore calls for strategic change at Entertainment One

(Adds Wednesday share move, background on CPPIB pension fund
stake, paragraphs 8, 14)
By John Tilak
TORONTO, Jan 20 (Reuters) - U.S. activist hedge fund
Livermore Partners is calling on Canadian and UK media firm
Entertainment One ETO.L to slow down its pace of dealmaking
and improve its cash flow, the fund's top executive said.
Livermore could also push the TV and film content and
distribution company into a sale of the entire business if the
fund does not see a reversal in strategy within the next 12
months, Livermore Managing Director David Neuhauser said.
Based in Toronto with its shares listed in London,
Entertainment One has announced a string of acquisitions and
joint ventures in recent years. EOne, as the brand is known,
also revealed plans last year to acquire a majority stake in
Astley Baker Davies, producer of the popular preschool franchise
Peppa Pig.
The company has been rapidly growing its revenue, but some
investors and analysts have been getting concerned that it might
be putting sales growth ahead of profits and debt management.
Livermore recently bought a stake in the company and has
begun engaging with some top executives. Last week, Neuhauser
wrote to Darren Throop, chief executive of Entertainment One.
"The equity looks dislocated from the recent moves you have
exercised to further your hold on the Peppa Pig franchise and
its global growth potential," he said in a copy of the letter
seen by Reuters.
Entertainment One's high-profile partnerships in recent
years include those with DreamWorks Studios and production
company Mark Gordon Co.
Canada Pension Plan Investment Board, one of the world's
largest pension funds, is the biggest shareholder in the
company. Wednesday's closing share price for Entertainment One
is down 44 percent from the £2.69 that CPPIB paid when it bought
52.9 million shares in September. It has added to its stake
since, and now owns almost 20 percent.
Throop did not immediately respond to a request for comment.
Spokespeople at Entertainment One and CPPIB declined comment.
"They don't view themselves as being overlevered. I do,"
Neuhauser said in an interview. "Unless they prove otherwise,
they'll have to scale back.
"I want to see a leaner, more-focused entity that can
compete globally with the likes of Lions Gate LGF.N ."
Neuhauser did not disclose the size of his stake.
Entertainment One's revenue rose about 56 percent between
2011 and 2015, and its shares shed about 8 percent in the last
four years. It reported revenue of 785.8 million pounds ($1.12
billion) for 2015.
The stock, down 54 percent from a high last July, spiked
briefly after Reuters reported Livermore's call for strategic
change, then fell again to end the day lower at at £1.50.
($1 = 0.7040 pounds)