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Comment by busterarm | Hacker News Reader

The quality of the IP that they sold off w/ eOne, both on the music side in their 2021 sale and the tv/movie side with this recent one, is staggering.

Notably, the entire Death Row Records catalog, Grey's Anatomy, Criminal Minds, international distribution for The Walking Dead, etc.

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Those notable titles are pretty old and past development. Same as Transformers.

I guess they don't want to be in the legacy media licensing business.

> they don't want to be in the legacy media licensing business.

Isn't that business basically free money? The way I see it, no capital investment is needed. You just need to keep a few accountants and lawyers around to handle occasional licensing paperwork. Am I missing something?

It might not be that straightforward when dealing internationally?

But doesn't that mean that at least nationally, it's essentially a money printing machine?

Because this is my layman's conception of how media licensing works, at least.

Does it matter? Hasbro probably has growth targets. They may have concluded that price hikes for legacy content matching their growth targets were unlikely to be feasible.

It may be "free money" as you frame it. But a cash stream that provides n dollars per year forever can be valued in today's dollars, assuming a discount rate of d, at n / (1-d). So it's reasonable to prefer cash now to revenue forever, at that exchange rate, depending on your corporate interests.

https://www.investopedia.com/terms/p/present-value-annuity.a...

You have the right idea, but you got the formula wrong. That's evidenced in the source you link, but you can also reason it from first principles: a higher discount rate should make the cash stream less valuable, not more. The correct formula is n / d.

Oops, that's what I get for mathing before coffee-- mixed up the formula for \sum (1+r)^n vs. \sum r^n

This strikes me as a shortsighted, risky, and frankly unsustainable attitude for a company. It's no surprise they're struggling.

The discount rate is doing a lot of work here. There is a discount rate such that we're not talking about shortsightedness. Getting it right is difficult. But as an example, how much would you buy an investment that pays a hundred dollars, guaranteed, next year for? Trivially, the discount rate includes at least the expected amount of inflation; it's not worth a dollar.

For assets line like IP you have to factor in how risky the returns are, how much investment you'd have to make to see them (e.g. making a movie), and overall strategy (do we want to be in that line of business).

All this to say - if you have IP that pays 10 million a year, you can value future returns on that IP in today's dollars. If someone offers you more than that to buy it, you should take the deal; you come out ahead.

It is very much not free -- they apparently raised a lot of debt to buy eOne, and they are going to have find a way to pay that off or roll it over into a much, much higher interest rate environment than 2019.

Well consider the recent spate of music artists who've sold their back catalogues. They're selling that future income for a lump sum [while they can enjoy it].

Hasbro is doing the same. Swap fifty years of slow income for instant liquidity. A company with as many steels in the fire as Hasbro should be able to use that to generate a lot more money than through legacy property.

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