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This comes after this year selling the rights to the Transformers movie series, an arguably larger hit to their ability to have mainstream impact. It seems very

This comes after this year selling the rights to the Transformers movie series, an arguably larger hit to their ability to have mainstream impact. It seems very unlikely they wouldn't be looking for a buyer for WotC as well, and trimming down to just the IP may be making it a better sale. The company is struggling and likely pulling out all the stops the avoid bankruptcy, when you need liquidity this could very much include cuts to otherwise profitable segments.

busterarm 3y ago
The quality of the IP that they sold off w/ eOne, both on the music side in their 2021 sale and the tv/movie side with this recent one, is staggering. Notably, the entire Death Row Records catalog, Grey's Anatomy, Criminal Minds, international distribution for The Walking Dead, etc.
- oliwarner 3y ago
  Those notable titles are pretty old and past development. Same as Transformers. I guess they don't want to be in the legacy media licensing business.
  - mcpackieh 3y ago
    > they don't want to be in the legacy media licensing business. Isn't that business basically free money? The way I see it, no capital investment is needed. You just need to keep a few accountants and lawyers around to handle occasional licensing paperwork. Am I missing something?
    - dageshi 3y ago
      It might not be that straightforward when dealing internationally?
      - gavinray 3y ago
        But doesn't that mean that at least nationally, it's essentially a money printing machine? Because this is my layman's conception of how media licensing works, at least.
    - fweimer 3y ago
      Does it matter? Hasbro probably has growth targets. They may have concluded that price hikes for legacy content matching their growth targets were unlikely to be feasible.
    - Stasis5001 3y ago
      It may be "free money" as you frame it. But a cash stream that provides n dollars per year forever can be valued in today's dollars, assuming a discount rate of d, at n / (1-d). So it's reasonable to prefer cash now to revenue forever, at that exchange rate, depending on your corporate interests. https://www.investopedia.com/terms/p/present-value-annuity.asp https://www.investopedia.com/terms/p/present-value-annuity.a...
      - Denvercoder9 3y ago
        You have the right idea, but you got the formula wrong. That's evidenced in the source you link, but you can also reason it from first principles: a higher discount rate should make the cash stream less valuable, not more. The correct formula is n / d.
        Stasis5001 3y ago
        Oops, that's what I get for mathing before coffee-- mixed up the formula for \sum (1+r)^n vs. \sum r^n
      - rf15 3y ago
        This strikes me as a shortsighted, risky, and frankly unsustainable attitude for a company. It's no surprise they're struggling.
        captaincrisp 3y ago
        The discount rate is doing a lot of work here. There is a discount rate such that we're not talking about shortsightedness. Getting it right is difficult. But as an example, how much would you buy an investment that pays a hundred dollars, guaranteed, next year for? Trivially, the discount rate includes at least the expected amount of inflation; it's not worth a dollar. For assets line like IP you have to factor in how risky the returns are, how much investment you'd have to make to see them (e.g. making a movie), and overall strategy (do we want to be in that line of business). All this to say - if you have IP that pays 10 million a year, you can value future returns on that IP in today's dollars. If someone offers you more than that to buy it, you should take the deal; you come out ahead.
    - jldugger 3y ago
      It is very much not free -- they apparently raised a lot of debt to buy eOne, and they are going to have find a way to pay that off or roll it over into a much, much higher interest rate environment than 2019.
    - oliwarner 3y ago
      Well consider the recent spate of music artists who've sold their back catalogues. They're selling that future income for a lump sum [while they can enjoy it]. Hasbro is doing the same. Swap fifty years of slow income for instant liquidity. A company with as many steels in the fire as Hasbro should be able to use that to generate a lot more money than through legacy property.
peterstjohn 3y ago
Well, why wouldn't they sell (license) the rights to make Transformers films (which as far as I know is just extending their existing contract with Paramount)? They still own the underlying IP[^1], so as long as the contract is a decent one, Paramount has to deal with the actual making/distributing the film, and Hasbro just gets the money, and a toy line off the back of the film. Feels like an easier set up than taking the risk on movie-making yourself (which they did attempt with eOne for other properties, but seemingly have decided that it's probably not a good deal with them) [1] yes, yes, it's a bit more complicated with Takara in the mix too, but you can essentially view it as a Hasbro-owned property
TheCleric 3y ago
I don’t see why they would sell WoTC considering it’s the profit generator that keeps the other businesses afloat.

busterarm 3y ago

The quality of the IP that they sold off w/ eOne, both on the music side in their 2021 sale and the tv/movie side with this recent one, is staggering. Notably, the entire Death Row Records catalog, Grey's Anatomy, Criminal Minds, international distribution for The Walking Dead, etc.

oliwarner 3y ago
Those notable titles are pretty old and past development. Same as Transformers. I guess they don't want to be in the legacy media licensing business.
- mcpackieh 3y ago
  > they don't want to be in the legacy media licensing business. Isn't that business basically free money? The way I see it, no capital investment is needed. You just need to keep a few accountants and lawyers around to handle occasional licensing paperwork. Am I missing something?
  - dageshi 3y ago
    It might not be that straightforward when dealing internationally?
    - gavinray 3y ago
      But doesn't that mean that at least nationally, it's essentially a money printing machine? Because this is my layman's conception of how media licensing works, at least.
  - fweimer 3y ago
    Does it matter? Hasbro probably has growth targets. They may have concluded that price hikes for legacy content matching their growth targets were unlikely to be feasible.
  - Stasis5001 3y ago
    It may be "free money" as you frame it. But a cash stream that provides n dollars per year forever can be valued in today's dollars, assuming a discount rate of d, at n / (1-d). So it's reasonable to prefer cash now to revenue forever, at that exchange rate, depending on your corporate interests. https://www.investopedia.com/terms/p/present-value-annuity.asp https://www.investopedia.com/terms/p/present-value-annuity.a...
    - Denvercoder9 3y ago
      You have the right idea, but you got the formula wrong. That's evidenced in the source you link, but you can also reason it from first principles: a higher discount rate should make the cash stream less valuable, not more. The correct formula is n / d.
      - Stasis5001 3y ago
        Oops, that's what I get for mathing before coffee-- mixed up the formula for \sum (1+r)^n vs. \sum r^n
    - rf15 3y ago
      This strikes me as a shortsighted, risky, and frankly unsustainable attitude for a company. It's no surprise they're struggling.
      - captaincrisp 3y ago
        The discount rate is doing a lot of work here. There is a discount rate such that we're not talking about shortsightedness. Getting it right is difficult. But as an example, how much would you buy an investment that pays a hundred dollars, guaranteed, next year for? Trivially, the discount rate includes at least the expected amount of inflation; it's not worth a dollar. For assets line like IP you have to factor in how risky the returns are, how much investment you'd have to make to see them (e.g. making a movie), and overall strategy (do we want to be in that line of business). All this to say - if you have IP that pays 10 million a year, you can value future returns on that IP in today's dollars. If someone offers you more than that to buy it, you should take the deal; you come out ahead.
  - jldugger 3y ago
    It is very much not free -- they apparently raised a lot of debt to buy eOne, and they are going to have find a way to pay that off or roll it over into a much, much higher interest rate environment than 2019.
  - oliwarner 3y ago
    Well consider the recent spate of music artists who've sold their back catalogues. They're selling that future income for a lump sum [while they can enjoy it]. Hasbro is doing the same. Swap fifty years of slow income for instant liquidity. A company with as many steels in the fire as Hasbro should be able to use that to generate a lot more money than through legacy property.

peterstjohn 3y ago

Well, why wouldn't they sell (license) the rights to make Transformers films (which as far as I know is just extending their existing contract with Paramount)? They still own the underlying IP[^1], so as long as the contract is a decent one, Paramount has to deal with the actual making/distributing the film, and Hasbro just gets the money, and a toy line off the back of the film. Feels like an easier set up than taking the risk on movie-making yourself (which they did attempt with eOne for other properties, but seemingly have decided that it's probably not a good deal with them) [1] yes, yes, it's a bit more complicated with Takara in the mix too, but you can essentially view it as a Hasbro-owned property

TheCleric 3y ago

I don’t see why they would sell WoTC considering it’s the profit generator that keeps the other businesses afloat.