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Disney buys 60% stake in online toy-seller

Hoping to become a player in the lucrative online toy-selling biz, Disney said Wednesday it has acquired a 60% stake in educational toy e-tailer Toysmart.com.

Under terms of the deal, Disney shelled out $20 million for the Waltham, Mass.-based company. Another $25 million has been earmarked for free advertising on Disney media outlets, including TV and Web sites.

Toysmart has a store inventory of 75,000 items, ranging from puzzles, building blocks and arts and crafts to baby products, children’s furniture and teaching supplies. The company is also dabbling with developing its own line of toys.

Disney’s Buena Vista Internet Group will hold three of five seats on the Toysmart.com board and provide marketing support to build the brand.

“Toysmart.com and BVIG believe that high-quality, educational toys represent an exciting business opportunity in a fast-growing market segment,” said Chuck Davis, prexy of e-commerce for BVIG.

Stiff competition

Disney could face some tough competition with its toy venture. The online toy market is already dominated by players such as eToys and Toys ‘R Us. Disney already sells merchandise through its Disney Store Online and Disney catalog.

“We’re trying to be the first company to build a credible alternative to selling to the mass market,” said David Lord, prexy and CEO of Toysmart.com.

Davis said Disney will use Toysmart.com to expand its parenting site, Family.com.

“What we’ve done is build a great parenting site, but what we have not done well is evolve that community site into an e-commerce site,” Davis said.

Besides Family.com, BVIG operates the Web sites Disney.com, ABC.com, ABCNews.com and ESPN.com.

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