Hasbro Enters the Movies

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This presentation explores the strategy of Hasbro putting its brands on the big screen. We will cover the company's history, past strategies, and the terms of the deal.

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  • 68 Years OldAlfred J. Verrecchia, Chairman of the Board of Hasbro, Inc. since 2008. President and Chief Executive Officer of Hasbro from 2003 to 2008. Prior thereto, President and Chief Operating Officer of Hasbro from 2001 to 2003. Director of Iron Mountain Incorporated. Mr. Verrecchia previously served on the board of directors of CVS Caremark Corporation from 2004 to 2007 and of FGX International Holdings Limited from 2009 until 2010. Mr. Verrecchia began his more than 40 year career with Hasbro in 1965 in the Company?s finance department. Mr. Verrecchia took on roles of increasing financial and operating responsibility during his career, serving eventually as Senior Vice President of Finance, then Chief Financial Officer, then Chief Operating Officer and ultimately as President and Chief Executive Officer. Mr. Verrecchia was a key architect of the Company?s turnaround strategy in 2000, which focused on leveraging the Company?s core brands, reducing costs and lessening the Company?s reliance on its licensed business
  • 68 Years OldAlfred J. Verrecchia, Chairman of the Board of Hasbro, Inc. since 2008. President and Chief Executive Officer of Hasbro from 2003 to 2008. Prior thereto, President and Chief Operating Officer of Hasbro from 2001 to 2003. Director of Iron Mountain Incorporated. Mr. Verrecchia previously served on the board of directors of CVS Caremark Corporation from 2004 to 2007 and of FGX International Holdings Limited from 2009 until 2010. Mr. Verrecchia began his more than 40 year career with Hasbro in 1965 in the Company?s finance department. Mr. Verrecchia took on roles of increasing financial and operating responsibility during his career, serving eventually as Senior Vice President of Finance, then Chief Financial Officer, then Chief Operating Officer and ultimately as President and Chief Executive Officer. Mr. Verrecchia was a key architect of the Company?s turnaround strategy in 2000, which focused on leveraging the Company?s core brands, reducing costs and lessening the Company?s reliance on its licensed business
  • 68 Years OldAlfred J. Verrecchia, Chairman of the Board of Hasbro, Inc. since 2008. President and Chief Executive Officer of Hasbro from 2003 to 2008. Prior thereto, President and Chief Operating Officer of Hasbro from 2001 to 2003. Director of Iron Mountain Incorporated. Mr. Verrecchia previously served on the board of directors of CVS Caremark Corporation from 2004 to 2007 and of FGX International Holdings Limited from 2009 until 2010. Mr. Verrecchia began his more than 40 year career with Hasbro in 1965 in the Company?s finance department. Mr. Verrecchia took on roles of increasing financial and operating responsibility during his career, serving eventually as Senior Vice President of Finance, then Chief Financial Officer, then Chief Operating Officer and ultimately as President and Chief Executive Officer. Mr. Verrecchia was a key architect of the Company?s turnaround strategy in 2000, which focused on leveraging the Company?s core brands, reducing costs and lessening the Company?s reliance on its licensed business
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    1. 1. Marco BoassoRyan HuelsmannTim Stewart
    2. 2.  Company Background Management Competitors Financial Highlights Alternatives Decision Making How Hasbro Entered the Movies Hasbro’s Role Results
    3. 3.  Founded in Providence Rhode Island in 1923  Hassenfeld brothers – Polish immigrants  Company first operated as textile remnant business  Started making school supplies  “Transformed” into making toys from 1930s to 1960  1952 Mr. Potato Head (first toy to advertise on TV)  1964 G.I. Joe – in 2 years it accounted for 2/3 of company sales - $40 million
    4. 4.  1968 went public 1975 discontinued G.I. Joe Company in poor financial situation by 1979 1982 G.I. Joe returned 1984 Transformers toy line is launched as well as cartoon 1980s and 1990s major acquisitions took place ▪ GLENCO – infant products ▪ Knickerbocker Toy Company – Raggedy Ann and Andy dolls
    5. 5. ▪ Milton Bradley – 1984▪ Coleco Industries – Cabbage Patch Dolls▪ Tonka Corporation and Tonka’s Parker Brothers unit, the maker of Monopoly▪ Kenner Products – Batman figures and Strawberry Shortcake doll▪ 1991 - Established operations in Greece, Hungary, Mexico▪ Nomura Toys – Japanese toymaker
    6. 6.  1995 Mattel approached Hasbro for merger ▪ Hasbro board turned it down due to fear of antitrust issues 1997 Hasbro purchased license for Star Wars $600 Million and gave 7.4% stake of company Steep losses from drop offs in Star Wars toys and Pokemon cards in late 20th century and early 21st 21st Century - Company started refocusing on traditional toy lines – G.I. Joe, Monopoly, Mr. Potato Head
    7. 7.  Alfred J. Verrecchia ▪ President and CEO ▪ COO from 2001 to 2003 Brian Goldner ▪ Chief Operating Officer ▪ Executive Producer of the first Transformer movie ▪ Chief Architect of brand drive movies David D.R. Hargreaves ▪ Chief Financial Officer
    8. 8.  Mattel ▪ Barbie ▪ Hot Wheels ▪ Fisher Price ▪ American Girl JAKKS Pacific ▪ Club Penguin ▪ Hello Kitty
    9. 9. HASBRO (In thousands) 2000 2001 2002 2003 2004 2005Net Rev $3,787,215 $2,856,339 $2,816,230 $3,138,657 $2,997,510 $3,087,627OpProfit ($104,277) $211,330 $219,291 $344,616 $293,012 $310,521Margin (.2%) 7.4% 7.8% 11% 9.8% 10.1% MATTEL (In millions) 2000 2001 2002 2003 2004 2005Net Rev $4,565.5 $4,687.9 $4885.3 $4,969.1 $5,102.8 $5,179.0Op Profit $370.6 $579.3 $733.6 $785.7 $730.8 $664.5Margin 8.1% 12.4% 15% 15.8% 14.3% 12.8%
    10. 10.  Hasbro has a history of purchasing companies and their brands  Milton Bradley (1984)  Tonka Corporation with Parker Brothers and Kenner Brothers (1991)  Wizards of The Coast (1999)
    11. 11.  Pros  More product brands for a diversified brand portfolio  Expand their limitations with Hasbro’s capital/knowledge Cons  Costly  Underperforming brands
    12. 12.  Entering into Licensing agreements  LucasFilms’s Star Wars  Marvel’s Avengers  Sesame Street Workshop
    13. 13.  Pros  Cons  Have access to  The shows/movies may successful brands not be successful thus  Focus on creating the product lines will toys/games instead of falter as result creating new brands and  Product line can still brand identities falter despite success of  Cost effective brand. Remember Lego and Harry Potter  Limited supply of brands available to be licensed
    14. 14.  In the 80’s, Hasbro had two animated series and comic books showcasing : G.I. Joe A Real American Hero (1984) and Transformers (1984) In addition, spinoffs of these series were created during the 90’s & early 00’s showcase on various television networks, animated movies and comic books. TRANSFORMERS 80S THEME On 10/10/10, the Hub was launched. A joint venture between Hasbro and Discovery Communications to launch more programs showcasing its various brands.
    15. 15.  Pros  Cons  Successful strategy that  Limited control over worked in the past networks such as time slots  Variety of animation styles  Show could get cancelled  Best example would be product line will not Transformers spinoff succeed. G.I. Joe Sigma Six Transformers: lasted 14 episodes. Beast Wars  Lots of competition (96-99) against other networks TV programming
    16. 16.  Building off the brands’ successes from the past, Hasbro now enters the realm of featured films to extend these brands to new heights Transformers Trailer Aligning with certain studios that will respect the brands such as Paramount/DreamWorks and directors that can deliver such as Steven Spielberg or Michael Bay
    17. 17.  Pros  Cons  Expanding market share  Cost  New technology in movies  New area for Hasbro by vs. the anime from the 80’s going into this venture  Revive/create new product  Not finding the right lines creative talent who will  Semi-familiar with the respect the brand or entertainment industry deliver an exciting movie through TV programs  Die hard fans disappointed  Don’t have to worry about or upset with the movie networks competing against TV programs
    18. 18.  Brian Goldner Joins Hasbro in 2000 Success of Spider Man movie reinforces idea of brand name could resonate as a motion price Goldner vision “re-invent, re-ignite, and re-imagine core brands to create new experiences for consumer
    19. 19.  Studios rejects Hasbro Transformers concept In 2003, Goldner contacts Bonaventura of Paramount Pictures about using GI Joe brand Producers Don Murphy and Tony DeSanto optioned the film rights and began writing a Treatment for Transformers Steven Spielberg signs on as Executive Producer DreamWorks Studios sold to Paramount’s Parent company Viacom
    20. 20.  Spielberg recruits Michael Bay as director Bay travels to RI and meets with Goldner to learn: ▪ What Transformer brand is about ▪ Stories that had to be told ▪ Family tree of characters and how they relate with each other
    21. 21.  Movie released and becomes blockbuster hit during summer of 2007 Grosses more than $700 million worldwide Spurned 2 sequels that debuted in 2009 and 2011 Laid the groundwork for other Hasbro brands to enter the big screen Re-sparked the brand on a massive scale that other brands like Kre-O work solely adjunct to the Transformers brand
    22. 22. Movie Domestic Foreign Gross Total Opening Awards Gross ($) ($) Worldwide Weekend ($) Gross ($)Transformers 319,246,193 390,463,587 709,709,780 70,502,384 Nominate(2007) with #1 in for 3 4,011 theaters OscarsTransformers: 402,111,870 434,191,823 836,303,693 108,966,307 NominateRevenge of the with #1 in for 1Fallen (2009) 4,234 theaters OscarG.I. Joe Rise of 150,200,000 151,800,000 302,000,000 54,700,000 NoneCobra (2010)Transformers: 352,390,543 770,805,646 1,123,196,189 97,852,865 N/ADark of the with #1 inMoon (2011) 4,088 theaters
    23. 23.  GI Joe 2 Retaliation  Risk Battleship  Stretch Armstrong Ouija  Candyland Monopoly  Micronauts Clue
    24. 24.  No money from box office revenue Revenues from movie tied to product sales:  Transformer toy sales for 2007: $470 Million  up from $30 million when Goldner joined in 2000
    25. 25. 2006 2007 2008 2009 2010Net Revenues $3,151,480 $3,837,557 $4,021,520 $4,067,947 $4,002,161Operating $376,363 $519,350 $494,296 $588,598 $587,859ProfitOperating 11.9% 13.5% 12.3% 14.5% 14.7%Profit MarginNet Earnings $230,055 $333,003 $306,766 $374,930 $397,752EPS (Diluted) $1.29 $1.97 $2.00 $2.48 $2.74Cash & Cash $715,400 $774,458 $630,390 $636,045 $727,796EquivalentsLong-term $494, 917 $845,071 $709,723 $1,131,998 $1,397,681Debt (currentportions)

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