WotC Filing: Wizards of the Coast makes up roughly 70% of Hasbro's value

[Staffan]

Bah, what would they know about it? They're probably still running a mono-black Shadow deck and wondering why everyone sideboards blue to make dupes.

(You're totally right, though.)

Nah, Finkel's both blue and black.

 

[The Glen]

Do you have a source for this - just so I can bring that up for other people who decide to get into the "WotC should get rid of Hasbro, just like these corporate raiders activist investors said they should!" nonsense.

It was a 5-minute clip with that mad money guy explaining the different scenarios of what could happen. It might be on YouTube I saw it on television

 

[Jer]

Here's the thing. I don't care about the investors' complaints. I don't care that they're not getting as much money as they might otherwise. Hasbro is not an anchor around WotC's neck. Hasbro's financial plans are an anchor around Alta Fox's neck.

When investor complaints about mismanagement line up with employee complaints about mismanagement I listen. The employees are usually more concerned about the long term health of a publicly traded company than any other stakeholders, including usually upper management. And definitely more than folks whose major interest in the company is how much they're going to be able to sell the stock for in the next few quarters - or even days. (Private companies are a bit different in that respect - there's usually a legacy that the folks at the top are concerned about).

But when investors are complaining that a company is "mismanaged" because they could make more money thought stock manipulating shennanigans and the management won't do it, they need to be roundly ignored. Not just ignored - actively shouted down. That's how companies get destroyed. Because folks like that are not motivated to thnk about the long term health of the company - they're motivated to think about how to maximize their earnings. And if destroying the company would make them wealthy beyond the dreams of King Midas, well, they're going to do that.

Wizards right now is a company that basically produces two products - Magic the Gathering and Dungeons and Dragons - along with being the major cog in Hasbro's long-term electronic gaming strategy. They are very profitable licenses to own right now, but being part of a larger company can help to shield them when times eventually again dip for those two major products. Because they will - the entertainment industry is not an ever increasing line of popularity, it's full of ups and downs.

 

[Mannahnin]

But when investors are complaining that a company is "mismanaged" because they could make more money thought stock manipulating shennanigans and the management won't do it, they need to be roundly ignored. Not just ignored - actively shouted down. That's how companies get destroyed. Because folks like that are not motivated to thnk about the long term health of the company - they're motivated to think about how to maximize their earnings. And if destroying the company would make them wealthy beyond the dreams of King Midas, well, they're going to do that.

Do you think that Finkel's involvement and their arguments about supporting Magic (already a major cash cow, but undersupported in some ways I can see as a mostly casual but longtime player) better are purely smokescreen?

 

[GreyLord]

Are you aware that corporations have a fiduciary duty to maximize the money the investors make? If they fail in that duty, they can be sued.

I'm one of those "investors" as one would put it. I'm not the expert, just trying to actually have money for my retirement to keep flowing to me...plus...I like the company (currently).

I feel it boils down to several things, one is where Alta doesn't like my board picks (not just mine, others too).

Currently it is boardroom politics, and they are playing nasty.

MY FEELINGS (which are just feelings and could be wrong) is that they are taking the Mitt Romney type of approach to money and earnings, whilst my current feel is to do more of an Amazon type approach (investing in the company for better futures later).

That means that money may come from another section and be invested to prop up another and grow the company while Alta sees this as money which they could be receiving annually being used trivially. They also disagree on where that money is being spent or how it is going and whether it will actually be a fruitful investment later.

Just some feelings on the matter from me.

It may be that they also feel that reinvestment into WotC itself would be more useful than that money being invested into alternate properties in Hasbro.

I personally don't like their approach thus far as I think it will actually be harmful to "investors" like me and put my money more at risk. I'm obviously NOT the only opinion in the matter though, and there are tons of other "investors" in the picture (some of who are probably also on these boards as well).

 

[Jer]

Do you think that Finkel's involvement and their arguments about supporting Magic (already a major cash cow, but undersupported in some ways I can see as a casual player) better are purely smokescreen?

Pure smokescreen? Probably not. It wouldn't be the first time some "activist investor" wargaming the companies moves out in his own head became convinced that he knows better than the folks managing the company.

But I suspect that the fact that "weaponized nerdom" has become a thing in the last few years online is the reason that they're pushing that narrative. Trying to get a mob of fans onto your side to push to get your way online works, so folks are going to keep using it as long as it keeps working.

 

[AbdulAlhazred]

When investor complaints about mismanagement line up with employee complaints about mismanagement I listen. The employees are usually more concerned about the long term health of a publicly traded company than any other stakeholders, including usually upper management. And definitely more than folks whose major interest in the company is how much they're going to be able to sell the stock for in the next few quarters - or even days. (Private companies are a bit different in that respect - there's usually a legacy that the folks at the top are concerned about).

But when investors are complaining that a company is "mismanaged" because they could make more money thought stock manipulating shennanigans and the management won't do it, they need to be roundly ignored. Not just ignored - actively shouted down. That's how companies get destroyed. Because folks like that are not motivated to thnk about the long term health of the company - they're motivated to think about how to maximize their earnings. And if destroying the company would make them wealthy beyond the dreams of King Midas, well, they're going to do that.

Wizards right now is a company that basically produces two products - Magic the Gathering and Dungeons and Dragons - along with being the major cog in Hasbro's long-term electronic gaming strategy. They are very profitable licenses to own right now, but being part of a larger company can help to shield them when times eventually again dip for those two major products. Because they will - the entertainment industry is not an ever increasing line of popularity, it's full of ups and downs.

All totally good points. I was wondering when someone would point out that WotC being on its own is, at best, a two-edged sword. Yes, they might, currently be getting slowed down in some way because they may be subsidizing some other product lines, but EVENTUALLY D&D will be in a doldrum again, and then it will be REALLY NICE that G.I. Joe or whatever is kicking out the cash that year.

IMHO these investors are just following the time honored tradition of splitting up a company. Any time you have a single business which owns several different product lines that are only loosely related it is VERY likely that selling each one off piecemeal will net you a profit in the short term. There's no reason to believe this is good overall for the whole business in the long run. In fact these same 'raiders' may well think they can snap up the choicest parts too. The big smell will come when someone starts saying the words 'private equity'. Then you know there's really good money to be made, but the public isn't invited to the party.

 

[Stormonu]

All I know is Hasbro needs to get its act together and fix GI Joe.

 

[Henadic Theologian]

All I know is Hasbro needs to get its act together and fix GI Joe.

Suggestions on how they do so?

 

[Parmandur]

Do you think that Finkel's involvement and their arguments about supporting Magic (already a major cash cow, but undersupported in some ways I can see as a casual player) better are purely smokescreen?

Nothing in life is pure, but pretty much yup, totsl smokescreen.

 

[Ancalagon]

But when investors are complaining that a company is "mismanaged" because they could make more money thought stock manipulating shennanigans and the management won't do it, they need to be roundly ignored. Not just ignored - actively shouted down. That's how companies get destroyed. Because folks like that are not motivated to thnk about the long term health of the company - they're motivated to think about how to maximize their earnings. And if destroying the company would make them wealthy beyond the dreams of King Midas, well, they're going to do that.

the main objective of a publicly traded corporation is to increase shareholder value. BY LAW, if a corporation does not do that, investors are allowed to sue.

If, supposed, putting you and I in a very large pot and boiling us alive would increase shareholder value, corporate ethics dictates that the corporation should do so, and the board would be remiss to not push for it; it's literally their job.

Is this wrong? Yes. But corporations cannot change because doing that might reduce shareholder value.

 

[Irlo]

the main objective of a publicly traded corporation is to increase shareholder value. BY LAW, if a corporation does not do that, investors are allowed to sue.

If, supposed, putting you and I in a very large pot and boiling us alive would increase shareholder value, corporate ethics dictates that the corporation should do so, and the board would be remiss to not push for it; it's literally their job.

Is this wrong? Yes. But corporations cannot change because doing that might reduce shareholder value.

People can sue for anything.

There is no statute in state or federal law requiring corporations to maximize shareholder value. They are required to maximize the value of the corporation and act in its best interest.

 

[Parmandur]

the main objective of a publicly traded corporation is to increase shareholder value. BY LAW, if a corporation does not do that, investors are allowed to sue.

If, supposed, putting you and I in a very large pot and boiling us alive would increase shareholder value, corporate ethics dictates that the corporation should do so, and the board would be remiss to not push for it; it's literally their job.

Is this wrong? Yes. But corporations cannot change because doing that might reduce shareholder value.

That's...not how that works.

 

[Jer]

the main objective of a publicly traded corporation is to increase shareholder value. BY LAW, if a corporation does not do that, investors are allowed to sue.

I don't blame you for believing this - because up until a few years ago I also thought it was true - but that's not really the case. The doctrine of "maximizing shareholder value" isn't really codified into law that way - corporations are required to act in the long term interests of the shareholders but they aren't required to act in such a way that benefits short term gains via stock price shennanians - especially not when those shennanigans damage the long term health of the corporation.

Why do we all believe that's the case? Mostly because there are a lot of people who woud like it to be the case and they benefit if we believe it to be true. Upper managment types can use "maximizing shareholder value" to excuse whatever harmful or even anti-social behavior they want to engage in. Investment types make their money by selling stocks, so they want it to be true that the entire economic system caters to them and their needs. And so on.

Even if you think about it for a bit it doesn't really make sense that it would be codified in the law that way - the idea that the law should cater to the needs of the people who are selling their ownership stake should take precendence over the needs of the people who are keeping their ownership stake is silly if you think about it. If you're going to protect someone's interests shouldn't it be the folks who are actually keeping a stake in the company, not the ones looking to sell it off? (This is also why the "activist investors" will always couch their arguments in how it impacts the long term health of the company - because they know that's how it actually works and the argument "I want this so stonks go up and I can sell" would be laughed out of the shareholder meetings).

Here's an interesting discussion about the idea - where it originated and where it went wrong - in the context of major business figures starting to talk about abandoning the idea a few years ago (uber capitalist Jack Welch called it "The Dumbest Idea in the World" over a decade ago, so this is a discussion in the corporate world that's been going on for a while): Why Maximizing Shareholder Value Is Finally Dying

 

[jasper]

All I know is Hasbro needs to get its act together and fix GI Joe.

Yes kung fu gripe sucks and breaks in a year.

 

[MoonSong]

All I know is Hasbro needs to get its act together and fix GI Joe.

I'm more concerned about the MTG cardstock... And seriously, please fix foils so they stop looking like pringles.

 

[Parmandur]

Pure smokescreen? Probably not. It wouldn't be the first time some "activist investor" wargaming the companies moves out in his own head became convinced that he knows better than the folks managing the company.

But I suspect that the fact that "weaponized nerdom" has become a thing in the last few years online is the reason that they're pushing that narrative. Trying to get a mob of fans onto your side to push to get your way online works, so folks are going to keep using it as long as it keeps working.

Yeah, that's why it is important to be clear in social media spaces, such as this, that this is not reflective of what "The Fans" wa t, just piratical stock brokers looking to score big game.

 

[Umbran]

Hasbro does own a ton of stuff, most of which aren't doing well, and many products have been shelved. Most of Hasbros value is generated by WotC. Some stuff like Nerf is still does well.

Do not equate "revenue" with "value". Every thing that Hasbro owns, but isn't currently pushing, still has value.

 

[AbdulAlhazred]

Suggestions on how they do so?

You know, IMHO the 'problem' with G.I. Joe isn't that it HAS a problem. Its problem is it is just a fairly silly kid's toy that is rooted in a sort of 'militaristic toy' aesthetic (it is a toy soldier after all). It doesn't really translate that well into a broader cultural thing. Its a shallow pond to play in, and nobody should be surprised when what comes out of it is shallow and rather trivial and has little real hold on people's minds. I think the 'fix' is to just make the best possible G.I. Joe dolls as possible, maybe a kid's cartoon or three, and call it a day! Find some richer milieu in which to tell actual stories that have characters that are not just cardboard cutouts and toon 'Dr Evil' style villains. Its a limited concept, maybe not the one that really has great potential to become a huge property.

I mean, contrast with Star Wars. Yes, it has plenty of silly stuff too, but the characters and situations are much deeper and more varied. Its just a lot better milieu in that you can use it in many more ways. You can have fuzzy ewok toys, space ships, heroic rebels, evil Sith Lords, etc. etc. etc. I mean, its not the most sophisticated stuff ever, but its a lot deeper than TESTOSTERONE PLUS AUTOMATIC WEAPON YEEEHHHHAAAA (with a touch of flag waving). Just saying.

And, in terms of how that relates to D&D... D&D is a heck of a lot broader than G.I. Joe also. IMHO its a much stronger IP in a lot of ways. You can do a lot with it. So, maybe in that sense the thought that taking earnings from D&D and using it to flog G.I. Joe is, long term, a losing proposition. OTOH that isn't to say that every other Hasbro IP is equally niche. I am far from having a catalog of what all they own...

 

[Scribe]

the main objective of a publicly traded corporation is to increase shareholder value. BY LAW, if a corporation does not do that, investors are allowed to sue.

I always laugh at this. It's such an absurd reality we have constructed for ourselves and our children.

'Why yes, corporations are people.' Is right up there too.