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Discovery, Hasbro Team on Kids’ Channel

Discovery Communications said it’s formed a joint venture to create a children’s programming venture that will rebrand the 60-million-home Discovery Kids channel and create new shows based on brands such as G.I Joe, Scrabble and Cranium.

Discovery, which has put channels into joint ventures with the likes of The New York Times and Oprah Winfrey before, will be paid $300 million. The channel, aimed at kids 14 and under, will relaunch in late 2010, the companies said.

“This joint venture reinforces Discovery’s strategy to develop strong brands, maximize the potential of our extensive distribution in the U.S. and work with the highest quality content partners to create long-term value,” Discovery Communications CEO David Zaslav said in a release.

The venture would of course compete against well established brands in the kids' space, including The Walt Disney Co.'s Disney Channel, Viacom's Nickelodeon and Time Warner Inc.'s Cartoon Network. The venture would receive a minority stake in the U.S. version of Hasbro.com and the companies would jointly go after merchandising and licensing revenue based on programming content. Discovery will handle ad sales, distribution and other operations and Hasbro will provide studio-produced programming.

The press release is here.

Zaslav and Hasbro CEO Brian Goldner said during a conference call with reporters that the venture would be searching for a CEO and that it would look to build new programming from Hasbro brands rather than take existing shows built on those brands such as Transformers: Animated on Cartoon Network. Hasbro first ventured into kids' TV in the mid-1980s with shows based on My Little Pony, Transformers and G.I. Joe, Goldner said, around the time John Hendricks was creating Discovery Channel. Hasbro also owns Romper Room, one of the first-ever kids' TV shows.

Zaslav said Discovery's fully distributed programming services -- Discovery Channel, Animal Planet and TLC -- generate 80% of Discovery Communications U.S. revenue, while 10 other services, including seven that like Discovery Kids are in more than 45 million homes each, represent a growth opportunity. The channels are all profitable, he said, but Discovery wants to make sure they are "relevant."

Discovery converted Discovery Home into eco-focused Planet Green, Discovery Health is becoming The Oprah Winfrey Network and Discovery Times -- a prior JV with The New York Times -- has been changed into Investigation Discovery.

Discovery has tried to build awareness for Discovery Kids before, airing its shows on NBC on Saturday mornings from 2002-2006.

Asked about competing in the kids' TV marketplace, Zaslav told reporters that "we look at the kids' space and Nickelodeon, Cartoon Network and Disney are very strong networks, but there's a very big audience out there. We have some fantastic brands, so together if we put on some great stories and strong programming we could build a very nice business for ourselves."

Current Discovery Kids shows include Bindi the Jungle Girl, Endurance and Tutenstein.

Advertising to children, especially young kids, is a sensitive subject and having a kids' network co-owned by a toy and game maker seemed certain to draw negative criticism.

Commercial Alert, described as a non-profit organization focused on keeping commercial culture from exploiting children, issued a statement saying "the Hasbro-Discovery Channel joint venture sounds like nothing more than a scheme to deliver program-length advertisements to children over television and advertisements disguised as interactive games over the Internet." It said it would "ask federal regulators to investigate whether the joint venture's plans are as nefarious as they sound in today's press release, and to take appropriate preemptive action to block plans to exploit children."

Discovery shot back, saying: "This criticism is unfounded and presumptuous. We just announced news of this network today. Great stories and characters will drive the programming on the new network. Overly commercialized content is not what viewers want and not a good business plan. Hasbro and Discovery are committed to creating a television network dedicated to high quality entertainment and educational content, and once parents and children see the actual focus of the new network in the fall of 2010, we are confident it will meet their expectations for quality and family friendly programming."