‘Bumblebee’ Movie Ups Hasbro Q3 Entertainment Revenue; Expects to Close eOne Acquisition in Current Quarter

Hasbro Oct. 22 reported a 20% increase in entertainment, licensing and digital segment revenue to $115.8 million compared to $96.8 million in the previous-year period.

Increased revenue was driven by Magic: The Gathering Arena and Paramount Pictures’ Bumblebee film revenue, partially offset by lower digital streaming revenue for Hasbro television programming.

Hasbro owns the rights to the “Transformers,” “G.I. Joe,” “Dungeons & Dragons” and “Micronauts” brands on which Paramount bases much of its theatrical slate.

Netflix is reportedly on board to produce the “Magic” feature film after a previous deal with 20th Century Fox never materialized.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Entertainment, licensing and digital segment operating profit decreased 21% to $24.6 million versus $37.1 million in 2018. The decline was the result of several factors, including higher operating profit margin in Q3 2018, due to the multi-year digital streaming agreement for Hasbro television programming.

Separately, CEO Brian Goldner said he expects to close Hasbro’s $4.3 billion acquisition of Canadian-based eOne in the current quarter.

“The strategic opportunity to bring onboard the brands, capabilities and talent from eOne is compelling to our long-term prospects as a leading global play and entertainment company and we look forward to sharing more about our plans after the close,” Goldner said in a statement.

Universal Pictures Home Entertainment and eOne in March signed a multiyear, multi-territory distribution agreement whereby UPHE will serve as the home entertainment distributor of eOne’s content across both transactional physical and digital formats.

Finally, Goldner said ongoing proposed government tariffs on Chinese manufactured goods would negatively impact product shipments and retailers entering the key winter holiday season.

CFO Deborah Thomas said the company experienced higher shipping and warehousing expenses as a result of the disruption and shift of retailer order patterns from proposed tariffs.

“Hasbro’s global teams are executing within a dynamic trade environment that is impacting the timing of revenues, driving incremental expenses and putting upward pressure on our underlying tax rate,” Thomas said.

Net revenue for the third quarter was $1.58 billion versus $1.57 billion in 2018. Net income was nearly $213 million compared to income of $264 million last year.

Best Buy, Roku, Apple Shares Rebound Following Tariff Delay

Shares of Best Buy, Roku, Apple and other consumer electronics retailers/manufactures rebounded after President Trump delayed until Dec. 15 a proposed new 10% tariff on cellphones, laptop computers, video game consoles and other goods manufactured in China.

The tariff on $300 billion worth of products, which Trump announced Aug. 1 as part of ongoing trade tensions with the world’s No. 2 economic power, would have been on top of an existing 25% tariff Trump previously imposed on $250 billion worth of other Chinese goods.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

The delay came after intense lobbying efforts in the nation’s capital convinced administration officials the new tariff could have serious implications to the U.S. economy entering the fourth quarter.

“Just in case they might have an impact on people … what we’ve done is we’ve delayed it so they won’t be relevant for the Christmas shopping season,” Trump told reporters on Aug. 13.

The news was welcomed by Wall Street, which saw shares of Best Buy, Apple and Roku rise 6.5%, 4% and 1%, respectively.

Roku is one of the largest manufacturer of Internet-connected televisions, with many originating from China.

But to the Consumer Technology Association trade group, delaying proposed tariffs only prolongs market uncertainty and impacts consumers 401(K) pension or retirement accounts, among other issues.

“Retaliatory tariffs are bad economic policy in the short and long term,” Gary Shapiro, CEO of the CTA, said in a statement. “The administration’s legally dubious trade war is compromising America’s global leadership.”

Previously-announced tariffs starting Sep. 1 will affect $52 billion in consumer technology products, and the tariffs starting Dec. 15 will affect $115 billion in products. Since July 2018, Section 301 tariffs on China have cost the consumer tech industry over $10 billion, including $1 billion on 5G-related products, according to the CTA.

“Tariffs are taxes,” Shapiro said. “The Chinese government doesn’t pay for them – Americans bear the burden. And next month, we’ll begin to pay more for some of our favorite tech devices – including TVs, smart speakers and desktop computers. The administration should permanently remove these harmful tariffs and find another way to hold China accountable for its unfair trading practices.”

IHS: China’s TCL Brand Tops North American TV Market

With just about everything made in China, it’s little surprise a Chinese television manufacturer has unseated South Korea’s Samsung for top unit sales in North America.

With China and the United States embroiled in a trade dispute, the rush to import Chinese TVs ahead of proposed tariffs is at a fevered pitch.

China’s TCL unit shipments climbed to 26.2% in the first quarter (ended March 31), up from 16% during the previous-year period, according to new data from IHS Markit.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Perennial market leader Samsung saw shipments drop to 21.8% from 28%. No. 3 Vizio shipments nearly reached 14%, according to the data first reported by Advanced-Television.

TCL, which markets TVs featuring the Roku operating system, helped drive North American unit shipments up 30% to a record 9.3 million units.

Samsung still dominates the market in revenue (36.9%) due to its larger screens across its product line and higher price points.

“As uncertainty mounts around a possible tariff-driven rise in costs, these brands have been bolstering shipments to protect against any potential disruption,” Paul Gagnon, research executive director at IHS Markit, said in a statement. “Given that margins for TVs are relatively low compared to other consumer-electronics categories, any tariff increase would have a major impact on sales.”

 

Roku, Apple, Amazon See Early Market Bounce Following U.S./China Trade Truce

Wall Street Dec. 3 reacted favorably early to tech stocks following weekend news the Trump Administration and China had reached a 90-day truce regarding proposed tariffs (taxes) on Chinese manufactured goods and raw materials.

Stocks for Roku, Apple and Amazon all climbed higher in pre-market trading as many — if not all — consumer electronics products, including the Roku Stick and branded televisions, Apple iPhone, Apple TV, Apple iPad, and Amazon Fire TV Stick are majority-made in China.

Trump had pledged to impose tariffs — beginning Jan. 1 — on $200 billion worth of Chinese-made steel and raw materials. Tariffs on another $267 billion in Chinese goods (i.e. consumer electronics) have been postponed as well.

Trump said the tariffs would be held off as trade negotiators between the two countries attempt to hammer out new trade agreements. In a Dec. 3 tweet, Trump wrote:

“My meeting in Argentina [at the G-20 summit] with President Xi [Jinping] of China was an extraordinary one. Relations with China have taken a BIG leap forward! Very good things will happen. We are dealing from great strength, but China likewise has much to gain, if and when a deal is completed.”

That was good enough for Tom Forte, analyst with D.A. Davidson, who upped from “neutral” to “buy” on Roku shares.

Meanwhile, Sacha Tihanyi with TD Securities, remained cautiously optimistic, writing in a note, reported by CNBC that “overarching concerns in the U.S.-China economic relationship remain … [and] are not ones that we believe can be easily tackled in a 90-day period.”

Roku CEO: Chinese Tariffs Have No Impact

Roku-branded televisions represent one-in-four smart TVs sold in the United States, with CEO Anthony Wood claiming the units are the top-selling TVs on Amazon.

Roku markets branded budget-priced TVs featuring a proprietary OS and assembled by eight manufacturers – Insignia, Element, TCL, Philips, Sharp, RCA, Hitachi and Hisense – four which are Chinese.

With President Trump Aug. 7 launching a second round of tariffs on 279 Chinese-manufactured products, or $16 billion worth of imports, Wood was asked on the fiscal call how tariffs could impact the cost of Roku TVs.

“They don’t appear to affect any of our products,” Wood said. “We have a lot of different TV manufacturers and they are not all in China.”

The Trump Administration is seeking to reduce the $376 billion trade deficit with China through 25% tariffs imposed on myriad products – excluding TVs – and materials manufactured in the People’s Republic of China– the world’s second-largest economy by GDP.

“It’s something that [could] change and so we’re monitoring it carefully,” Wood said.