The situation looks bad. The pit props have collapsed and if something isn’t done soon, it could be curtains. Hold on . . . is that the sound of hooves?

Executives of Entertainment Rights may not be in the last-chance saloon but unless the Lone Ranger comes riding to the rescue pretty soon, there could be more warnings along the lines of yesterday’s that triggered a 55 per cent share price collapse.

The media group owns the rights to the masked cowboy. And following news this week that Johnny Depp is to play Tonto – the Lone Ranger’s side-kick – in a new film, the company will hope that Depp will do for Lone Ranger merchandise what he did for Captain Jack Sparrow offerings from the Pirates of the Caribbean series.

Entertainment Rights, whose shares slid 3.71p to 2.98p, said that its earnings for 2009 and 2010 would be hit by a change to the deal with its main DVD distributor in America. It said the revised agreement with Genius Products in July has resulted in lower royalty margins. Nevertheless, it has regained certain valuable intellectual property rights for future exploitation.

The company, which this year terminated takeover talks involving Och-Ziff, the US hedge fund, and began a strategic review, expects earnings to be down by about £7 million for the year to February 2009, and by £6.5 million for 2010. The group, which has a market capitalisation of £49 million, said yesterday that net debt stands at about £127 million and the group has been forced to hold “constructive discussions” with its lending bank.

It said in a statement to the market: “This increased level of drawings is expected to reduce significantly over the key Christmas trading period, where projected orders from our key US retailers are currently tracking around 12 per cent above last year, although debt levels are likely to remain above previously anticipated levels for a number of months.”

The balance sheet of Entertainment Rights has come under pressure since its acquisition of Classic Media, the owner of Lassie and the Lone Ranger, for £106.9 million. At the time of the aborted takeover talks in January, the company said that it had encountered distribution problems. It said that the Christmas period had been worse than expected because shops did not receive key DVDs in time. Shares in the group then fell more than a quarter as it admitted that revenues for 2007 were expected to be “slightly below the lower end of the current range of market expectations”.

A leading shareholder said yesterday that it did not believe that this was the time for the group to be acquired, saying that the Lone Ranger film should be a success, particularly with Depp’s involvement.

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