Hasbro: Ad Spend Falls, But Discovery Alliance Debuts In 2010

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After curtailing ad spending during the holiday season last year, toymaker Hasbro has continued to make cuts so far this year. Revenues, however, have largely held up amid the recession.

Advertising spending during the October-December quarter in 2008 fell 6%. On Monday, the company reported an 11% drop to $279 million for the first nine months of this year. The most recent quarter -- which included the back-to-school period -- also saw an 11% decrease.

CEO Brian Goldner did not comment on spending plans through the end of this year, but said a "challenging" retail environment is expected.

Hasbro, which has brands such as G.I. Joe and Play-Doh, reported a slight 2% drop in revenues (to $1.28 billion) in the recently completed July-September period -- a figure it said would have been up 1% if currency fluctuations were stripped out. Net earnings jumped 9% to $150.4 million.



The results came despite investments in its 50-50 joint venture with Discovery, which includes the Discovery Kids network, and has a library of programming to utilize. Hasbro plans to offer more details about the refashioned network next month, but has said content will be derived from brands ranging from Trivial Pursuit to Transformers, GI Joe to Scrabble. Hasbro is also building its own production studio.

The network is to be launched next year in 60 million homes targeting kids 14 and under. It will have a first-look deal for the programming created by Hasbro Studios.

Goldner said the aim is "creating immersive brand experiences."

On a conference call to discuss 3Q results, Goldner said the company is making "great progress" working with Discovery. Kids' entertainment veteran Margaret Loesch has been hired to head the venture.

Hasbro has made a $300 million payment to Discovery for the half stake in the network. As of July 31, it said it expected to owe about $70 million more to the media company.

In the recent third quarter, Hasbro reported that the investment caused a 3 cents dilution in earnings per share, and said it expects a higher one in the fourth quarter (related to both the network studio). Hasbro reported $1.5 million in earnings so far from the Discovery co-venture.

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