Would Disney buy Hasbro?

Toy rights associated with Marvel and Star Wars are on the line, but Mattel and Viacom may balk at the idea.

By Jason Notte Nov 6, 2012 4:32PM

Image: Girl hula hooping in backyard -- Pauline St. Denis, Tetra images, Getty ImagesIt's a schoolyard rumor, but a potent one considering the finances of the kids involved: Disney (DIS) wants to buy Hasbro (HAS).


Granted, the source is an anonymous writer at MTV Geek quoting anonymous sources about a deal that's "still just discussions at this point." But the speculation stands on some pretty solid business bedrock considering Disney loves buying anything a kid has ever liked.


For one, Disney just shelled out $4 billion last week to acquire Lucasfilm, giving it full control of the Star Wars universe and putting plans in motion for another Star Wars film in 2015. Secondly, Disney paid $4.2 billion for Marvel Comics back in 2009 and has folded all of Marvel's characters into Disney's stable with Mickey, Minnie, Buzz Lightyear and everyone else.


Know what Disney didn't get for its more than $8 billion investment? The toy rights to its Star Wars and Marvel characters. Hasbro has held the rights to Star Wars toys since 1991, when it bought out Tonka and its Star Wars-coupled subsidiary Kenner. Hasbro is also contracted to produce Marvel-related toys until 2017, which means cash from any toy tie-ins for Iron Man, X-Men, Spider-Man or Avengers sequels made during that span funnels away from Disney.


That would make Disney understandably anxious to bring all that toy money ASAP, but there are a few messy little details that make this deal more dream than reality. First off, Hasbro's Transformers and G.I. Joe summer blockbusters are properties of Viacom's (VIA.B) Paramount Pictures. That studio already watched Disney eat its lunch once when it bought Marvel and began transferring over film rights to everything after "Iron Man 3," so it's not likely to let two more cash cows leave quietly.


Secondly, there's the small matter of Hasbro's partnership with Discovery (DISCA) on The Hub cable network. The Hub carries G.I. Joe, Transformers, Beyblade and other Hasbro-based animated series, which Disney would love to fold into its own cable channels.


Finally, there's the not insignificant matter of Disney's existing toy partner Mattel (MAT). Disney Stores are filled with merchandise made by the biggest toymaker in the U.S., and buying a toy company could at the very least strain that relationship, which exists on a strictly contractual basis. Disney Princess items and other toys marketed to girls helped increase Mattel sales 22% last quarter, so losing the Mouse's support would be a huge hit to Mattel's toy box.


Disney would shore up its supply of toys marketed to boys by adding Hasbro's Star Wars and Marvel items, but it would also be playing with toys nobody wants. Hasbro's earnings dropped 3.6% last quarter thanks largely to a 12% decline in boys' toys. Meanwhile, its girls toy segment jumped 17% over the same span and could only improve with some help from Disney's Princesses.


All of this discussion may be a bit premature, though, as MTV Geek notes that Disney waited three years after buying Marvel to make its play for Lucasfilm. Disney CEO Bob Iger is in place until 2015 and, judging by Hasbro's nearly $5 billion market cap, he would be looking at another big-budget buy if he wanted to put Disney into the toy business.


Iger doesn't have to go out and buy Hasbro now. Much like any other kid with his or her eye on a toy this season, he may just have to wait it out and see what the holidays bring.


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4Comments
Nov 6, 2012 8:00PM
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I think Disney is not going to buy Hasbro because shareholders will scream bloody murder. The shares are dilluted for the next several years to absorb the new shares issued to Lucas and the cash that went out the door on the deal. No increase on dividend for shareholders, no major increase in stock. CEO Bob Iger had promised months ago there would be no more major expenditures and he lied.
Nov 6, 2012 11:56PM
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If Disney were to buy out Hasbro, they would no doubt start to change all of its toys to appeal to toddlers, instead of what Hasbro is doing and appealing to its brony fanbase with my little pony collectables. Thus, by changing the my little pony toys, they would lose a lot of potential money, and if they changed the animated show's. No doubt Disney would have some very violent riots on its hands.

Someone go on change.org and petition Disney to stop buying everything.

Nov 7, 2012 11:32AM
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"Disney would shore up its supply of toys marketed to boys by adding Hasbro's Star Wars and Marvel items, but it would also be playing with toys . Hasbro's earnings dropped 3.6% last quarter thanks largely to a 12% decline in boys' toys. Meanwhile, its girls toy segment jumped 17% over the same span and could only improve with some help from Disney's Princesses."


>>girls toy segment jumped 17% over the same span
>>*if you know what i mean*

Sadly, if the hypothesis above is true, the acquirement of Hasbro may not improve the sale of Disney's Princesses at all, since the sale boost comes from a completely nontraditional non-sequitur factor.

Nov 6, 2012 11:58PM
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Well, I'm gonna grab some shotguns and california tickets after this.
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