RUMOR: Disney Buying Hasbro?

[danlb_2000]

Here's at least one historical story on the topic...

http://money.cnn.com/magazines/fortune/fortune_archive/1997/08/18/230223/index.htm

should be able to find something about the license deals struck after this Hasbro screw up

From that article it appears the Kenner/Hasbro has a perpetual deal for Star Wars toys for a pretty small royalty but gave it up during the "dark times" between the original trilogy and the prequels at which point Lucas struck a separate deal with Galoob. I would bet that any merchandising deal Lucas has gotten into after the release of the original movie gives Lucasfilm a lot of control.

 

[flynnibus]

From that article it appears the Kenner/Hasbro has a perpetual deal for Star Wars toys for a pretty small royalty but gave it up during the "dark times" between the original trilogy and the prequels at which point Lucas struck a separate deal with Galoob. I would bet that any merchandising deal Lucas has gotten into after the release of the original movie gives Lucasfilm a lot of control.

From what I'm finding.. it sounds like licensing has been awarded based on blocks of properties.. like the deals struck for the prequels time probably only covered those times.

Deals like these those rarely include 'we can kick you out for no reason clauses' - the investment is just too big for parties to swallow that... maybe huge buyouts.. but even those are hard to swallow for the licensee. I'd wager (without spending more time researching for the true answer...) that the existing deals are unbreakable (in a practical sense) and are limited to the agreed upon scope (original trilogy, prequels, etc).

I'd bet for the new properties.. Disney will be able to license new deals.

 

[danlb_2000]

And here is some PR from when Hasbro extended their SW deal through 2018 back in '03

HASBRO AND LUCAS EXTEND STAR WARS LICENSE THROUGH 2018

Pawtucket, RI (January 30, 2003) - Hasbro, Inc. (NYSE: HAS) announced today that its license with Lucas Licensing Ltd., for the manufacture and distribution of Star Wars toys and games, has been extended for an additional ten years.
"We are delighted to extend our long-term relationship with Lucas," said Alan G. Hassenfeld, Hasbro's Chairman and Chief Executive Officer. "This extension provides us with a real economic benefit by allowing us to continue to build and expand on the success of this franchise property for many years to come."
"Lucas and Hasbro have always viewed Star Wars as a long-term proposition. This extension truly gives us the opportunity to plan far into the future for the benefit of all the fans who have followed the saga for the last 27 years," said Howard Roffman, President of Lucas Licensing. "Hasbro is unmatched in the boys action arena, and we are confident that their future work on Star Wars toys and games will continue the tradition of excellence they have established."
Under the terms of the extension, the agreement is expected to run through 2018. The minimum guarantee payable to Lucas has also been reduced by $85 million.
"Based on the restructuring of these agreements, we do not expect any current or future impairment charge related to Star Wars," said David Hargreaves, Hasbro's Chief Financial Officer. "Lucas has shown they are a true partner of Hasbro."
In a separate agreement, Hasbro extended by ten years the terms of the warrants it previously granted to Lucas Licensing Ltd. and Lucasfilm Ltd. The warrants provide for the purchase of an aggregate of 15,750,000 shares of Hasbro common stock. This agreement further provides Hasbro with an option running through October 13, 2016, to purchase these warrants from Lucas for an aggregate purchase price of either $200 million in cash, or $220 million in Hasbro common stock, such stock being valued at the time of exercise of the option. In addition, the agreement provides Lucas with an option during the next five years to sell all of these warrants to Hasbro for a price to be paid at Hasbro's election of either $100 million in cash or $110 million in Hasbro common stock, such stock being valued at the time of exercise of the option.
The agreement with Lucas Licensing Ltd., continues to give Hasbro exclusive worldwide rights to core action figures, vehicles and games, electronic hand-held games, die cast vehicles and creative play products.
Hasbro will announce its fourth quarter and full year 2002 results on Thursday,
February 13, 2003 and will be hosting a webcast of the conference call at 9:00 a.m. EST.

http://phx.corporate-ir.net/phoenix.zhtml?c=68329&p=irol-newsArticle_pf&ID=376633&highlight=
http://apps.shareholder.com/sec/viewerContent.aspx?companyid=HAS&docid=2132683

Good find. So Hasbro has the rights for 5 more years, which brings up the question of whether it would be worthwhile for Disney to buy them to get control of the contract, or will they make enough in royalties that it wouldn't be worth it.

 

[Rivers Rowe]

My feeling is, Iger is buying up his loose ends, purchasing Hasbro makes any existing contract fruitless. It would also make Star Wars toys, or any toys related to owned properties even bigger cash cows. People are knocking Iger for all his spending but he's setting up the company for the long haul.

 

[danlb_2000]

My feeling is, Iger is buying up his loose ends, purchasing Hasbro makes any existing contract fruitless. It would also make Star Wars toys, or any toys related to owned properties even bigger cash cows. People are knocking Iger for all his spending but he's setting up the company for the long haul.

Right, but in the long haul they will get the rights back either way. As flynnibus found the Star Wars agreement with Hasbro is up in 2018, not sure about any Marvel agreement. Is it really worth buying Hasbro just to get back the rights for a few year. Not saying I know the answer to this, just raising the question.

 

[flynnibus]

Right, but in the long haul they will get the rights back either way. As flynnibus found the Star Wars agreement with Hasbro is up in 2018, not sure about any Marvel agreement. Is it really worth buying Hasbro just to get back the rights for a few year. Not saying I know the answer to this, just raising the question.

There are other sources that say 2020... as if maybe another deal was struck even later than 2003. I was just finding some details, not trying to find the true state as it is today. There may be more, so don't take those finds as gospel on what today's situation is. But I have pretty good certainty about the 2003 deals.

But all of this talk is rubbish anyways IMO.

Why would Disney pay billions for Hasbro to simply get a licensee who is already paying them royalties? Sure there is the profit margin Hasbro is making on those toys.. but it would take ages to get an ROI on paying billions just for that small slice. A period of time that would be much longer than simply waiting for the next renewal period.. and if Disney does NOTHING - they still are getting paid.

Buying it for Transformers? Fanboi dreams.

The whole reason people license out brands like this is to get money without taking all the risks yourself. It's solid financial sense to do so. Don't pay billions to save millions. Disney spends billions when it thinks it will MAKE them more billions.

 

[danlb_2000]

There are other sources that say 2020... as if maybe another deal was struck even later than 2003. I was just finding some details, not trying to find the true state as it is today. There may be more, so don't take those finds as gospel on what today's situation is. But I have pretty good certainty about the 2003 deals.

But all of this talk is rubbish anyways IMO.

Why would Disney pay billions for Hasbro to simply get a licensee who is already paying them royalties? Sure there is the profit margin Hasbro is making on those toys.. but it would take ages to get an ROI on paying billions just for that small slice. A period of time that would be much longer than simply waiting for the next renewal period.. and if Disney does NOTHING - they still are getting paid.

Buying it for Transformers? Fanboi dreams.

The whole reason people license out brands like this is to get money without taking all the risks yourself. It's solid financial sense to do so. Don't pay billions to save millions. Disney spends billions when it thinks it will MAKE them more billions.

I totally agree. Saw this article from the Providence Journal (Hasbro is based in Rhode Island) that says there is no truth to this rumor.

http://news.providencejournal.com/b...-street-focuses-on-spike-in-hasbro-stock.html

 

[unkadug]

I totally agree. Saw this article from the Providence Journal (Hasbro is based in Rhode Island) that says there is no truth to this rumor.

http://news.providencejournal.com/b...-street-focuses-on-spike-in-hasbro-stock.html

Due to insider trading laws there could be no leak to the press of any type.


Just saying.

 

[ZipADeeSarah]

Don't know if anyone has posted this yet (as I haven't read all the posts in this thread yet,) but I received a LONG survey yesterday from Disney asking how much money our household has spent on character merchandise. In addition to Mickey and co. and the princesses and fairies, they specifically asked about Winx, Strawberry Shortcake, Barbie, and DC Comic characters. They were specifically asking what we bought for our 9 yr old in the past 12 months.

 

[M.rudolf]

If this deal does have legs it might not be for royalties of any franchise but to set Disney up for the long haul. Just imagine if Disney had the control of the product from concept all the way to finished product. Why make just royalties when you can control every aspect of quality and have all the pie not just part of it. Maybe igers not after any specific royalty but access to the factories. I think the next big acquisition will be Sony pictures, they are hurting big time and are looking to move it if the right price was offered

 

[flynnibus]

Why make just royalties when you can control every aspect of quality and have all the pie not just part of it.

Because you can control that without being the one responsible for the manufacturing capacities and support functions.

Only get into a space if you can do it BETTER than your partners.

 

[Taylor]

If this deal does have legs it might not be for royalties of any franchise but to set Disney up for the long haul. Just imagine if Disney had the control of the product from concept all the way to finished product. Why make just royalties when you can control every aspect of quality and have all the pie not just part of it. Maybe igers not after any specific royalty but access to the factories. I think the next big acquisition will be Sony pictures, they are hurting big time and are looking to move it if the right price was offered

And the fact that they have the film rights to spiderman would be a reson to want Sony right

 

[danlb_2000]

Because you can control that without being the one responsible for the manufacturing capacities and support functions.

Only get into a space if you can do it BETTER than your partners.

This is a very good point. Lots of companies adopt the policy of focusing on thier core compentencies and outsourcing everything else. Sometime it just doesn't make sense to do it yourself. Even if you can save a little money doing it yourself, there are often downsides that outway the savings.

 

[M.rudolf]

Because you can control that without being the one responsible for the manufacturing capacities and support functions.

Only get into a space if you can do it BETTER than your partners.

Sometimes things are a little simpler than that. Disney has bought numerous things without having any intention to do it better than anyone else

 

[M.rudolf]

And the fact that they have the film rights to spiderman would be a reson to want Sony right

They have the rights to a few lucrative franchises.

 

[Mickey_777]

This may put the rumors to rest...for now...

http://www.tfw2005.com/transformers-news/other-news-20/hasbro-not-in-talks-with-disney-176270/

 

[flynnibus]

Sometimes things are a little simpler than that. Disney has bought numerous things without having any intention to do it better than anyone else

You don't spend 5+billion dollars to put down a competitor. And incompetence is not a counter to the business principle quoted.

 

[Taylor]

They have the rights to a few lucrative franchises.

The Smurfs, and some really popular franchises that are huge in England

 

[M.rudolf]

You don't spend 5+billion dollars to put down a competitor. And incompetence is not a counter to the business principle quoted.

Why not they spent close to 300 mil on a film and then buried it. What I think you don't get is they could then manufacture items from concept to finish. The additional access to the factories could be incentive to do this. It also ads numerous ip. Not just transformers and it also adds another avenue for programming with hub. There's more to there strategy than buying something with only one purpose in mind. In the pat 10 years Disney has made numerous incompetent moves

 

[flynnibus]

Why not they spent close to 300 mil on a film and then buried it

Well beyond the obvious orders of magnitude... the movie business is inherently a risk proposition.

What I think you don't get is they could then manufacture items from concept to finish. The additional access to the factories could be incentive to do this

Hasbro (like most other companies) primarily relies upon contract manufacturing. They only have two factories of their own, and they aren't significant to their overall manufacturing. They are already on the same footing as a company like Disney. Put in the volume, and you get the access to the plants.

It also ads numerous ip. Not just transformers and it also adds another avenue for programming with hub

The Hub? They already have cable channels (XD and Jr) for that market.. and the Hub is a joint venture with Discovery. The Hub doesn't represent a huge income potential to Disney (lumped into a pile that only made 25 million last year). The big money franchises (Transformers, GI Joe) are already tied up in movie deals.

Unless you expect great potential from NERF movies or My Little Pony... this is more liability then gain for Disney.