Two Grown-Up Brands That Aren't Toying Around

by , Oct 18, 2011, 7:45 AM
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As difficult as it to think of Thomas the Tank Engine and Legos as graybeards in playland, they’ve both been around for more than a generation, are chugging along nicely and are in the news this week.

The British-owned company that owns Thomas has been on the auction block for a while, evidently, and it now looks like Mattel may make a deal as early as this week, although all of the usual caveats about possible derailments apply. Thomas is operated by Hit Entertainment, which was bought by Apax Partners in 2005. It hired Bank of America Merrill Lynch late last years to advise on an auction, MarketWatch reports, but Mattel has outlasted other suitors, including Walt Disney Co. and Hasbro.

The price is around £500 million ($789 million), which is not much more than the £489 million Apex paid six years ago. But that’s about half of what bankers anticipated when the offer got rolling, Daniel Schäfer, Anousha Sakoui and Ben Fenton report in Financial Times. And that’s despite the popularity among Chinese young ’uns of what The Wall Street Journal calls “the world's most famous anthropomorphic choo-choos.”

Analysts tell the Journal’s Dana Cimilluca and Ann Zimmerman that Hit's brands (which also includes Bob the Builder) and its production capabilities, are a good fit with Mattel, despite feelings among some “toy insiders” that the price might still be too high.

"If Hit's production capabilities have access to Mattel's brands -- Barbie, He-Man, Hot Wheels -- imagine what might happen,” says BMO Capital Markets analyst Gerrick Johnson. “There are a lot of synergies here." I can already see Barbie and Ken on the 6:52 out of Greenwich.

Legoland Florida, meanwhile, opened in Orlando on Saturday. Legoland is owned by another British company, Merlin, which has plans for a half-dozen or so additional theme parks in the U.S., according to Brooks Barnes in the New York Times, including a Madame Tussauds wax museum in Orlando and Legoland Discovery Centers in Atlanta and Kansas City that will join one that’s already in Dallas.

Theme parks have proven to be reliable escapes for people even in the recession and its aftermath, Barnes reports. “We would much rather see increased investment in parks than in other media areas, like film -- the returns are simply better,” says Nomura media analyst Michael Nathanson.

“An estimated 50 million Lego bricks now adorn the park, where ‘pink-knuckle’ roller coasters (in keeping with the focus on young children) have been re-themed to fit Lego toy lines like castles and jungle adventuring,” Barnes writes.

Legoland is on the 150-acre property in Winter Haven formerly occupied by Cypress Gardens and it has incorporated some of the heritage of the park that closed in 2009, Dewayne Bevil of the Orlando Sentinel reports, including a water-ski show.

Winter Haven is about a 45-minute drive from theme-park haven Orlando. “Central Florida is a Mecca for theme parks.” Legoland executive Adrian Jones tells the Miami Herald’s Marjie Lambert. “Since Disney World opened in 1971, if you have a credible theme park brand, you have to be there.”

Legoland actually sounds like a restoration of the American Dream. Dry rot and mold have been removed. Cypress Gardens was famous for bounteous botanical gardens and they have been restored. And, Bevel reports on his blog, Legoland’s employees are called “model citizens.” He writes: “This might be an eye-roller if we didn’t live in a city populated with tens of thousands of [Disney] ‘cast members’ and can say it with a straight face.”

(“Call me whatever you want, just give me a job,” as many as 20% of Americans may be saying if real-estate, publishing magnate and McLaughlin Group wag Mortimer Zuckerman’s analysis is accurate. See “The Exasperation of the Democratic Billionaire” in the Wall Street Journal. Clearly, we need a little infusion of Bob the Builder’s spirit: “Can we fix it? Yes, we can,” is his other-than-infectious theme song.)

While we’re digressing…. One of these days, my 22-year-old son is going to be very happy that his collections of Legos and Thomas engines didn’t suffer the fate of my generation’s prized possessions when, on April 22, 1971, in a mass craze of spring-cleaning fever, mothers across the country evidently threw out their sons’ baseball card collections, including the Mickey Mantle rookie cards that they’d planned to use to fund their retirements.

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