Hasbro 2009 Annual Report Download - page 20

Delays or increased costs associated with the development and offering of entertainment media based
upon or related to our brands, or lack of sufficient consumer interest in such entertainment media, can
harm our business.
As part of our strategy of offering immersive brand experiences, we look to offer consumers the ability to
enjoy our brands in as many different forms and formats as possible. Entertainment media, in forms such as
motion pictures and television, can provide popular platforms for consumers to experience our brands and the
success of such media efforts can significantly impact demand for our products and our financial success.
The success of our products is often dependent on the timelines and effectiveness of media efforts.
Television programming, movie and DVD releases, comic book releases, and other media efforts are often
critical in generating interest in our products and brands. Not only our efforts, but the efforts of third parties,
heavily impact the launch dates and success of these media efforts. When we say that products or brands will
be supported by certain media releases, those statements are based on our current plans and expectations.
Unforeseen factors may delay these media releases or even lead to their cancellation. Any delay or
cancellation of planned product development work, introductions, or media support may decrease the number
of products we sell and harm our business.
Similarly, if our and our partners’ media efforts fail to garner sufficient consumer interest and acceptance,
our revenues and the financial return from such efforts will be harmed. In 2009 we entered into a joint venture
with Discovery Communications, Inc. (“Discovery”). Through that joint venture, we are currently working
with Discovery to offer a children’s and family entertainment channel called THE HUB, which is scheduled to
debut in the fall of 2010. In connection with this joint venture effort, we are also building a virtual studio,
called Hasbro Studios, which will develop and produce entertainment media based on our brands. Lack of
consumer interest in and acceptance of THE HUB, programming appearing on THE HUB, other programming
developed by Hasbro Studios, and products related to that programming could significantly harm our business.
Similarly, our business could be harmed by greater than expected costs, or unexpected delays or difficulties,
associated with the introduction of the rebranded joint venture network, the development of Hasbro Studios
and the creation of new content based on our brands to appear on the joint venture network and elsewhere.
At December 27, 2009, $371,783, or 9.5%, of our total assets represented our investment in the Discovery
joint venture. If the launch of the rebranded television channel is not successful, or if there are subsequent
declines in the success or profitability of the channel, then our investment may become impaired, which could
result in a write-down through net earnings.
Economic downturns which negatively impact the retail and credit markets, or which otherwise damage
the financial health of our retail customers and consumers, can harm our business and financial
performance.
The success of our family entertainment products and our financial performance is dependent on
consumer purchases of our products. Consumers may not purchase our products because the products do not
capture consumer interest and imagination, or because competitor family entertainment offerings are deemed
more attractive. But consumer spending on our products can also be harmed by factors that negatively impact
consumers’ budgets generally, and which are not due to our product offerings.
Recessions and other economic downturns, or disruptions in credit markets, in the markets in which we
operate can result in lower levels of economic activity, lower employment levels, less consumer disposable
income, and lower consumer confidence. Any of these factors can reduce the amount which consumers spend
on the purchase of our products. This in turn can reduce our revenues and harm our financial performance.
In addition to experiencing potentially lower revenues from our products during times of economic
difficulty, in an effort to maintain sales during such times we may need to reduce the price of our products,
increase our promotional spending, or take other steps to encourage retailer and consumer purchase of our
products. Those steps may lower our net revenues, decrease our operating margins, increase our costs and/or
lower our profitability.
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