Discovery, Hasbro to Launch Kids Cable Network

Discovery Communications and toymaker Hasbro on Thursday announced a joint venture to launch a cable network devoted to children’s entertainment and educational programming.  

Per terms of the agreement, Hasbro will pony up $300 million for a stake in a re-imagined Discovery Kids Network, which will launch under a new name in late 2010. The channel’s programming slate will be spun from classic Hasbro properties such as Transformers, G.I. Joe, Monopoly, Candy Land and Tonka.

The two partners will also take advantage of Discovery’s library of children’s educational programming, an archive that includes series like Bindi The Jungle Girl, Tutenstein and and Peep & the Big Wide World.

Upon launch, the new kids’ outlet will reach some 60 million U.S. households.

While a management team and a creative roster have yet to be identified, David Zaslav, president and CEO of Discovery, said that a search is underway. A new name/brand is also in the works.

“Hasbro is the perfect partner for us,” Zaslav said. “They bring 90 years of experience in children’s entertainment with brands that people love and feel really strong about, brands that people remember from when they were growing up. … Viewers have a real affinity and emotional connection to all these brands and we look forward to bringing them to television with Hasbro.”

Upon launch, the new network will be the fourth Discovery property to get a makeover since Zaslav took the reins in January 2007. Investigation Discovery was launched on Jan. 27, 2008, assuming the Discovery Times slot on the cable dial, while Planet Green arose from the Discovery Home network on June 4 of last year. Early 2010 will see the rise of OWN: The Oprah Winfrey Network, a mega-brand lifestyle net that is set to replace Discovery Health in 73 million households.

Hasbro first ventured into the TV space back in the mid-1980s, developing animates series based on best-selling toy brands My Little Pony, G.I. Joe and Transformers.

While the footy-pajamas set is already well served by franchises like Nickelodeon, Disney Channel and Cartoon Network, Zaslav said there’s always room for another kid-friendly outlet. “There’s a big audience out there,” he said. “If we put on some great stories we could build a very nice business for ourselves.”

In a note to investors, Barclays Capital analyst Anthony DiClemente on Thursday called the venture “a strong deal for Discovery,” noting the $300 million in incremental revenue Discovery stands to gain. Along with the bonus scratch, the deal allows Discovery “to leverage a network that has struggled to improve ratings in the past,” DiClemente said.
 
Early-morning trading saw shares of Discovery rise 15 cents to $19.42.