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Hasbro CEO expects company can grow double digits in 2021

Brian Goldner, Hasbro CEO, joins Yahoo Finance to discuss the company’s restructuring and rebranding of its Potato Head line.

Video Transcript

BRIAN SOZZI: Hasbro is coming off a pretty impressive investor day, where its executive team laid out their vision for the toy and content creator. Brian Goldner is Hasbro's chairman and CEO. And he joins us now to chat more about that vision. Brian, always good to speak with you here, really a very in-depth investor day, really looked into the heart of the company.

One thing that stood out to me, among many, is you have 200 content related projects in the works, powered by your acquisition of eOne. How much are you going to spend on content creation this year, and where are you spending?

BRIAN GOLDNER: Yeah, our plan-- good morning, Brian-- is to spend between $675 and $750 million a year on content. Recognize that we risk mitigate that investment by pre-selling or licensing right. So really only about a third of that is at risk in any period of time. But it gives us a great opportunity to develop, and we are developing, a range of Hasbro IP. We have more than 30 active Hasbro IP projects up right now.

We've talked about the Dungeons and Dragons movie and the My Little Pony animated feature coming, Dungeons and Dragons live action television coming, new Transformers iterations, as well as Power Rangers. So over time, we'll continue to develop. We expect that we'd get a few motion pictures in the market between '22 and '23, and three to four of our live action streamed television series and other series into the marketplace. And then we'll scale from there.

BRIAN SOZZI: Brian, I know you're a big movie fan. So I think this is correct to ask you this one. How do you think the-- all this content moving to streaming platforms first, Disney Plus, Viacom, CBS, platforms like that, how do you think that changes the toy industry? Because, you know, a big movie comes out, Transformers, kids get excited. Parents get excited. And they go out and buy these toys. But do you see that changing as more of this content moves direct to streaming?

BRIAN GOLDNER: Well, first, you know, we do believe the movie business will come back. If you look at other territories around the world where COVID had been mitigated earlier, whether it's Japan or in China, we're seeing the movie business, the box office really come back. So we expect people want to get back out to theaters. People want to travel and go do things with their friends and see one another. So the movie business will come back.

Having said that, we've also seen an inflection point, where the stream content is being watched by enough viewers at any period of time where we're able to eventize that and work with our global retailers to bring it to life. So whether it's been the Mandalorian that's been an incredible success certainly on Disney Plus and for us here at Hasbro, or whether it's the Transformers War for Cybertron anime series that's on Netflix that really activated that brand for the fan economy, and we're seeing great merchandising success there with our global retailers, we see this moment where we're gone past a point.

People are watching a lot of streamed content. And it gives us the opportunity to engage in collectibility and across the fan community and in play patterns.

JULIE HYMAN: Hey, Brian, it's Julie here. At your investor day, you talked about your new reporting structure. You basically did a restructuring. Entertainment was one of those divisions. Consumer products was another and then Wizards of the Coast and digital gaming. Now I have to say, you know, I think restructuring is not the sexiest thing to talk about always. And it's not as exciting as say a new product.

Can you sort of outline for us in real terms what difference this is going to make within the business, and why maybe investors should be excited about a something like a restructuring?

BRIAN GOLDNER: Yeah, and I wouldn't view it as a restructuring, more as a transparency and some-- and clarification to allow for our business to be run and to show people how our business is being run, and just where the drivers are of growth and revenues and earnings power, our operating margin, and how that becomes more accretive as we activate more Hasbro brands. So Wizards and digital has been a key area of growth for us and a key area of investment.

And we've seen that kind of growth where Wizards is on a path to double in size over the five year period through 2023. We wanted to show people just what Wizards was doing. And so by shining a light there, people now understand that digital gaming and fantasy gaming for lifetime gamers is a really important area for us and how we're investing and activating a whole host of new games to sit alongside of our analog games at Wizards of the Coast.

In consumer products, we wanted to make sure we could show how innovation and creativity would continue to have our consumer products business, including traditional toys and games, to run ahead of the industry growth rate. And that we believe we can grow in that manner. And then, of course, for eOne, it's our first year past COVID, where we're going to be able to really show people we're back in business.

The business grew in the fourth quarter. TV and film grew by 20% in the fourth quarter. So we're back in productions. And we wanted to really give people a sense that we believe Wizards can grow double digits. eOne will grow significant double digits. And with the toy growth, we expect that Hasbro can grow double digits in 2021 and maintain margins and grow margins beyond that.

We've set an objective for operating margins to be beyond 16% over the next few years. And we absolutely believe we can achieve that. So we view it as real clarity around how we run our business and so that our shareholders and stakeholders understand that as well.

MYLES UDLAND: Brian, it's Myles here. I want to ask a little bit about your guys highlighting kind of your new ESG focus or some things you're doing in that direction in the investor day. Because we talk to a lot of investors on this program who all say they're interested in ESG strategies. We don't hear from a lot of management teams who then outline exactly how they're trying to, I guess, fit into some of those buckets.

So what have those conversations been like internally? And talk us through a little bit of what you guys rolled out.

BRIAN GOLDNER: Yeah, we've been engaged with investors around ESG. And clearly, there are key criteria and metrics. And we're publishing our objectives around CSR to ensure that people understand what sustainability should look like and how we're running a great company through great corporate governance. But we really believe that we could embed purpose, our mission of making the world a better place for children and their families, all children, fans, and families, as part of the mantra of everything that we do.

And so we've elevated Kathrin Belliveau, who's now our chief purpose officer. And she's got a full practice here at the company, where we're bringing together all the elements, engagement, ESG, how we look at our communications, to ensure that all stakeholders, internal and external, really can see Hasbro through the same lens that we see. That responsibility that we take to ensure that we are a company that's on the move, that has a real mission in mind, and that we can achieve that through a great purpose.

JULIE HYMAN: Finally, Brian, got to ask you about potatoes.


JULIE HYMAN: And speaking of ESG, I guess you're not going back to actual potatoes to stick things in as for your Potato Head line. But there was some confusion around the sort of rebranding of the Potato Head line and some sort of outrage, as typically comes around these things, which I personally think is unfounded. But that's neither here nor there. What are you guys doing with Potato Head? Can you clarify and explain for us?

BRIAN GOLDNER: Sure. Well, Mr and Mrs. Potato Head have been around since the early '50s. In fact, the first toy commercial is credited to the Potato Heads back in the early '50s. And clearly kids were playing with it then. It's been a part of Hasbro and a part of childhood around the world. The Potato Heads, Mr and Mrs. Potato Head, continue to be offered. But the opportunity is to introduce the entire Potato Head family.

And so the team is actively busy getting ready for a family, kind of a play pattern launch, where you'll have children and other family members that kids can also play with. And it really comes from great consumer insight. The consumer was saying, and parents and kids were both equally saying, that more creative play from Potato Head would be a good thing. And so we're expanding the brand. The Potato Heads are a big family, and we need to share that with the world.

BRIAN SOZZI: Brian, before I let you go, are there other brands that are like the Potato Head brand that might get a, I don't know, not reinvention or just a name change like this?

BRIAN GOLDNER: You know, we look all the time to see how we continue to learn every day from consumers. And we look at consumer insight and audience Insights and gamer insights literally every day. We're trying to learn something in a proprietary way to ensure that we're making our product as innovative and as connected to the experiences that our audiences want from our brand. So nothing to share today. But clearly, we're always on the lookout.

BRIAN SOZZI: Well, Brian, you truly get it all when you come on with us, talk some investor day, ESG, Mr Potato Head, definitely get it all. We'll leave it there. Brian Goldner, Hasbro chairman and CEO, always good to see you. Stay safe, and we'll talk to you soon.