Kids club Hub-bub

New channel aims to cash in while mollifying interest groups

At first glance, the upcoming TV partnership between Hasbro and Discovery appears to be a throwback to an earlier era in tyke TV.

The Hub launches Oct. 10 with a mix of original and acquired fare, at least 25% of it inspired by Hasbro brands such as Monopoly and “My Little Pony.”

That mix of branded programming is giving some watchdogs flashbacks to the 1980s, the peak of marketers’ encroachment on Saturday morning kids TV.

“It’s a cynical intensification of advertising and marketing to kids,” says children’s activist Susan Linn.

But execs at the Hub and its parent companies are betting on the net to break off a piece of the lucrative kids’ television market without upsetting interest groups.

That upside could be enormous for both Hasbro and Discovery. The kids market may be tiny, but it can also be quite lucrative.

Gone are the days of syndicated kids’ TV shows playing after school and Saturday morning on the major broadcasters; as cable moved in, stations and networks got out of the kids game.

For the most part, non-PBS children’s programming is divided up among three commercial cable players: Cartoon Network, Nickelodeon and Disney’s suite of channels (led by the ad-free Disney Channel).

Of those, Nickelodeon alone is predicted to rake in $1.2 billion in gross ad revenue this year, plus a fee of 48¢ per subscriber. Cartoon’s ads are on track to make $442 million with an 18¢ fee per sub, and up-and-comer Disney XD (resurrected from the anemic Toon Disney) climbing with $131 million in ads and a fee of 14¢ per sub.

“In the adults 25-54 demo, there are about 40 channels that do really well,” said Discovery prexy David Zaslav at a press conference for the net in September. “In the kids’ demo, there are three.”

Zaslav isn’t the only one who sees the discrepancy. Sponsors in the kids market have been frustrated by the lack of options: They have little choice but to keep their ad dollars with the nets they’ve invested in and hope for the best, even when ratings drop.

At the same time, Zaslav had a property on his hands in Discovery Kids that had strong distribution — 60 million homes — but no viewers. Just as Discovery partnered with Oprah Winfrey to turn another moribund channel, Discovery Health, into OWN, Zaslav saw an opportunity to aggressively get into the kids business by finding a partner well-established in that space.

“If it becomes a viable player, it’s a negotiation tool,” says media buyer Brad Adgate, who purchases ad time for clients wanting to reach young demos.

To help the Hub succeed where Discovery Kids didn’t, the owners turned to Margaret Loesch, an exec who built Fox Kids Network from scratch and turned it into the dominant kids player in the 1990s.

Loesch will rework for today’s kids some of the properties she made into hits earlier in her career. If there’s such a thing as an all-star team in the relatively acclaim-free world of television animators, the Hub has assembled it. Vets of “Rugrats,” “Powerpuff Girls,” and “Batman: The Animated Series” have been tapped to create shows for the net.”I programmed the original ‘My Little Pony’ and, trust me, this one is much better,” Loesch says. (“Powerpuff” creator Lauren Faust masterminded that one.)

Highest profile are prolific screenwriters Alex Kurtzman and Roberto Orci, who wrote both “Transformers” films and will be writing the CGI half-hour featuring the ‘bots for the network.

In addition to targeting tots, the net’s marketing strategy appears to be aimed squarely at older Gen X and Gen Y auds, with reruns of the original “G.I. Joe” cartoon skedded for latenight (where it will compete with Cartoon Network’s popular Adult Swim) and resurrected properties like Jim Henson’s “Fraggle Rock” during the daytime.

“It’ll lend itself to co-viewing,” says Adgate. “Maybe kids want to watch something on Nick Jr., but Mom says, ‘Oh, “My Little Pony!” This is a great show!’ ”

Hasbro is also providing the net with plenty of inhouse advertising — you can’t buy a Transformer these days without finding a “Watch the Hub!” sticker emblazoned on it.

The approach, though, has clearly raised the hackles of watchdogs.

“Hasbro has been involved in promoting excessively violent films to very, very young children,” says Linn, who feels that parents nostalgic for the good ol’ days of ’80s kids’ TV may too soon forget that “G.I. Joe” and the “Transformers” movies were made for teens and twentysomethings but marketed in Happy Meals.

The organization Linn co-founded, the Campaign for a Commercial-Free Childhood, is definitely concerned about kids’ TV. The Campaign recently filed a complaint with the FCC that has the regulator looking into Nickelodeon’s upcoming “Zevo-3,” a cartoon based on characters created for a Skechers USA ad campaign (at least one other kidnet passed on the program earlier this year, likely fearing such a response). Nick maintains that the program does not fit the definition of “program-length commercial,” but the FCC has taken preliminary steps, publicly seeking comment from other interested parties.

“We have to see the Hub. We’re keeping our eye on it and we’re very concerned about it,” Linn says when asked if her org plans any action against Hasbro. “The programming exists to promote the toys, and so the fact that they’re getting talented people to work on it is beside the point.”

Linn has gone after the toy giant before, when it was considering a new line of toys for girls under 10 based on burlesque pop group the Pussycat Dolls in 2006. The line was canceled.

Loesch told reporters the Hub was very mindful of concern over (and even hostility toward) programming that seems exploitative to parents and activists like Linn. She emphasized that the net’s advertising minutes during dayparts with high preschool viewership would be six, rather than the allowed 12, and that the net was self-limiting Hasbro-branded programming to 25% of its sked (Linn, for her part, notes that there are no regs in place to prevent the net from reneging on any of these promises).

Discovery and Hasbro have also run into a bit of a snag on the advertising side. Turns out it’s difficult to persuade advertisers to give money to a competing business.

Hasbro’s initial sales pitch to main competitor Mattel reportedly broke down over the question of why Mattel would advertise with one of its rivals, but a source at Mattel says that the larger toymaker now does plan to buy time on the net.

Still, there are no guarantee that other toy companies will follow suit. Hasbro exec Brian Goldner says his company will advertise on the network, of course, but that there are no contractual obligations for it to continue to do so.

Loesch and Zaslav say they’re pleased with advertiser response so far. And Adgate predicts that while it may take time for the Hub to build a following, if it manages to do so it will become a valuable tool for leveraging ad buys.

“It’s a new audience every five years,” says Adgate. “Kids still watch Bugs Bunny and Bullwinkle — it’s new to them.”

The ultimate goal, of course, is higher sub fees and commercial rates than the numbers that Discovery Kids was posting.

Zaslav says Discovery Kids’ subscription fee, which netted $49 million for Discovery last year, is a respectable starting point, but the net’s ad sales were only $13 million in 2009 (all numbers are from SNL Kagan).

Signs point to further growth potential, however, as rival Disney XD, which rebranded less than two years ago, is on track to earn $36 million more in 2010 than in 2009.

If the Hub takes off, it may be the beginning of a wider kids’ television market, with more options for advertisers and producers of children’s entertainment. But it may also jump-start another industry that had been quiet as of late: the world of children’s TV advocacy.