Hasbro to Create Branded Cable Channel

Toy Maker Continues Entertainment Push in Joint Venture With Discovery Communications

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NEW YORK (AdAge.com) -- Hasbro already has its sights set on becoming a major movie maker, with upcoming films based on popular brands Transformers and G.I. Joe set for release this summer, and Monopoly, Clue and even Stretch Armstrong poised to get the big-screen treatment.

Hasbro has agreed to pay Discovery $300 million for a 50% stake in the new network which will replace the existing Discovery Kids.
Hasbro has agreed to pay Discovery $300 million for a 50% stake in the new network which will replace the existing Discovery Kids.
Now Hasbro will become the first kids' marketer to create a branded cable network, through a joint venture with Discovery Communications, to launch in late 2010. The new cable network will replace the existing Discovery Kids, which is available in 60 million homes. Hasbro has agreed to pay Discovery $300 million for a 50% stake in the venture.

It's a branded-entertainment play not seen since Hallmark created the Hallmark Channel around its original movies as an outlet for its Hallmark Gold Crown stores and greeting cards. In a conference call with investors, Hasbro CEO Brian Goldner saw similar cross-promotion potential for Hasbro products and programming.

"Today's announcement speaks once again to the power of Hasbro's brands and affirms the company's strategy of providing innovative and immersive entertainment experiences for consumers of all ages in any form or format where and when they want it," he said. "We recognized that if we were going to reach our potential both in terms of satisfying interest in our brands and enhancing shareholder value, we knew we needed to extend our value beyond our games."

Rebranding spree
David Zaslav, president-CEO of Discovery Communications, has been on a rebranding spree with Discovery's underperforming networks. Discovery Home was redubbed Planet Green last summer, and Discovery Health will become the Oprah Winfrey Network in early 2010. He said of the Hasbro venture, "The combined assets of both partners provide a compelling platform for building a trusted children's destination that engages and enlightens a thirsty and growing audience."

David Zaslav
David Zaslav
It also creates a firestorm of potential controversy regarding the limits of marketing to children. The Campaign for a Commercial-Free Childhood was quick to issue a statement that called the new venture a "new low in children's television, a network devoted to showing infomercials for Hasbro's toys and games." The consumer-advocacy group's director, Susan Linn, continued in her statement, "It makes a mockery of existing ad limits and the current prohibition of product placement in children's television. We hope that the FCC takes a long, hard look at this new venture as they consider whether their current restrictions on embedded advertising are adequate to protect children."

A Hasbro-branded network could also create potential conflict for other toy brands looking to reach a similar audience. Jackie Kulesza, senior VP-activation director for Publicis' Starcom, a media agency whose clients include major kids marketers such as Kellogg, Nintendo and toy maker Lego, said, "They're clearly talking about merchandising and shows tied to brands, so it will be something that a competing toy company's going to have to think about. For non-toy companies, it's an injection of new supply into the marketplace, which is always a good thing."

Discovery Kids had been downgraded on many media buyers' priority lists, having ended its partnership with NBC's Saturday morning lineup in 2006 and ditched its Nielsen ratings in recent years. "It was not a big player by any means," Ms. Kulesza said. "It had some opportunities in some specific places, but it wasn't going to take the place of any big players who are Nielsen-rated. So this is an opportunity to garner revenue they weren't getting before."

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