Just before the holiday break, at a time when companies normally try to bury bad news, Spin Master announced that had signed a deal with Warner Bros. Consumer Products (WBCP) to be the DC global licensee for boys’ action figures, remote control and robotic figures, games, puzzles and water toys. The three-year deal is effective in Spring 2020.
Rights in most (if not all) of those categories have long been held by Mattel. Spin Master, Mattel and WBCP officials weren’t available for comment. Mattel has had licensing agreements with WBCP across a range of properties since 2002.
The agreement will give Spin Master access to the range of DC characters, including Batman, Superman, Wonder Woman, The Joker, Justice League and The Flash. It’s expected that Mattel will continue to hold rights for girls’ toys with the DC Super Hero Girls license and preschool.
Gerrick Johnson, toy industry analyst for BMO Capital Markets, issued a comment Monday noting that for Mattel, “Initially, this loss will not look good to the press or stock market, but the license is not important to [its] turnaround. We believe the segments lost represent less than $50 million in annual run rate sales, and an impact of under $0.05 per share. The core business is often augmented by movie tie-ins. However, over the past several years, movie tie-ins have not shown growth and have been mostly underperforming expectations….
“While [Mattel] has not commented,” he continues, “we suspect the company sees better growth opportunities and return in investment in its own brands. [Spin Master] did not comment of the cost of the license, but if Warner had demanded high royalty rates and minimum guarantees, it could have made sense for the company to walk away. Mattel can potentially re-bid for the license in three years when the company is on firmer footing, as we expect it to do with Disney Princess when that license is up for renewal.” Also up for renewal in 2020 are Hasbro’s pacts for Marvel and Star Wars.
For Spin Master, the pact is the most recent in a series of licensing deals it has signed this year, including one announced this fall with Feld Entertainment (Monster Jam).
Spin Master President Ben Gadbois said in a press release that the DC license marks a “major milestone” for the company and is part of its strategy to invest in “successful licenses” that “further grow and diversify our business.”