Hasbro Management Says The Hub, Film Strategy Remain on Track

"Transformers: Dark of the Moon"
Courtesy of Paramount Pictures

Warner Bros. Records' June release of Transformers: Dark of the Moon -- The Album (they don't call it a soundtrack) follows the age-old model of repurposing from artists on a label's roster, including songs by My Chemical Romance, Goo Goo Dolls and Linkin Park.

The Hub wants to reach half the size of Cartoon Network over five years, and CEO Brian Goldner says he hopes to have an update on another potential "Transformers" movie over the next quarter.

NEW  YORK - Toy giant Hasbro remains on track with its business plan for kids network joint venture The Hub and its film strategy, CEO Brian Goldner and COO David Hargreaves said Wednesday at the company's investor day in Rhode Island.

Following the releases of Hasbro-properties based films Battleship and GI Joe: Retaliation next year, Goldner said he expects more films that are currently in development. He reiterated that the company is in "active conversations" on and working with writers on movies based on Stretch Armstrong, Risk, Clue, Monopoly, Ouija, Micronauts and Candyland.

Asked about where a possible fourth Transformers film stands, he said "it would be silly for us not to talk about having another Transformers movie" given the third installment's success. But he said he had no new news before reiterating he hoped to have news over the next quarter or so.

He cited the strong international box office of the third film, pointing out that its $766 million international take was bigger than the total $709 million worldwide box office of the first Transformers movie.

Goldner also lauded the October ratings of The Hub, in which Discovery Communications is Hasbro's partner, in the kids 2-11 demo where it found its best total day viewership and tripled ratings over the year-ago performance of what was then known as Discovery Kids.

Meanwhile, Hargreaves said Wednesday that The Hub was not the center of Hasbro's TV strategy, but the key to unlocking it. 

While ratings started off slower than hoped, they have improved, with the show Family Game Night in early October beating Nicktoons programming, among others, and the network also beating some Disney XD programming.

In 2012, Hasbro expects to cover 70 percent of program production cost amortization through program revenue sources before any merchandise revenue contribution, he also said. Program production cost amortization, estimated at $30 million-$40 million this year and $60 million-70 million in 2012 will peak and plateau at $70 million-$80 million in 2013 and beyond, he said.

Why own a cable network? Not only is The Hub a distribution point for multiple shows that enables Hasbro Studios to produce shows for global distribution, but it also boosts merchandise sales of toys tied to key brands featured on the air, Hargreaves said. Plus, cable networks can be profitable, he added in pointing out that the channel is positive on an earnings before interest, taxes, depreciation and amortization.

"It takes time to build a network," Harvgreaves concluded, saying that advertising revenue is increasing, distribution expanding, merchandise revenue growing and on track to hit $300 million next year, and ratings improving. All this makes the company's four to five year plan for its U.S. TV business achievable. He closed by saying the Hub's goal is to become a top 5 kids network in the U.S. and reach half the size of Cartoon Network.

Hasbro CFO Deb Thomas also said in a presentation that "we are in the early stages of building a competitive kids network."

Email: Georg.Szalai@thr.com

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