Toy Maker Hasbro Partners With Discovery Kids Network on New Channel
April 30, 2009
In a deal that will surely make activist groups salivate and may have rivals looking over their shoulder, Discovery Communications and Hasbro are partnering on a new kid's cable channel aimed at the elusive 14-and-younger demographic.
Under the terms of the deal, Hasbro, makers of Trivial Pursuit, G.I. Joe, Transformers and Scrabble, will pay $300 million for a 50% stake in Discovery Kids Network, the cable programmer's current children's channel that is available in 60 million homes. Discovery Kids is set to be renamed and relaunched late next year.
For Discovery, the deal lowers its exposure in a business that has proved to be a rare misfire for the cable programming giant. Viacom's Nickelodeon, Walt Disney's Disney Channel and Time Warner's Cartoon Network dominate the kids arena in terms of ratings and advertising. Other efforts by Discovery to jump-start Discovery Kids, including a much ballyhooed partnership with NBC a few years ago, have failed to raise the brand. Last fall the cable channel asked Nielsen to discontinue measuring its ratings because the audience numbers were so tiny.
"We needed some more oomph, we needed a partner that had some additional understanding of kids," said Discovery Chief Executive David Zaslav. "If we can strike the right note, we think we can build a compelling business." That right note is merchandising, which both Zaslav and Hasbro Chief Executive Brian Goldner stressed will be a high priority for the new venture.
Hasbro had been looking for a television partner for the last year and had approached several cable networks before reaching an accord with Discovery.
"TV is the next step for us to relaunch and reinvent our brands," said Goldner, citing the company's previous success in movies with "Transformers" and in video games through a deal with Electronic Arts.
The ink was barely dry on the press release before activist groups started blasting the new channel.
"This partnership represents a new low in children's television, a network devoted to showing informericals for Hasbro's toys and games," said Dr. Susan Linn, director of Campaign for a Commercial Free Childhood, a Boston-based children's advocacy group. Commercial Alert, a Washington, D.C.-based watchdog group, said the venture "sounds like nothing more than a scheme to deliver program-length advertisements to children."
Though Hasbro will provide original programming for the channel, Zaslav and Goldner dismissed complaints that the new service will be little more than an infomercial for the toy maker.
"This network will not be successful if it is overly commercialized," Goldner said. Though Hasbro has a lot of say in the programming, the channel will carry educational fare from Discovery's library as well as content from outside producers.