Discovery boosts its stake in Hub Network

Discovery Communications has increased its ownership stake in a children’s channel known as the Hub Network and plans to rebrand it as Discovery Family with hopes of appealing to a wider audience.

The Burbank-based channel, launched four years ago, was a 50-50 joint venture with toy maker Hasbro Inc. The companies set out with an ambitious mission to invade the children’s TV market, which long has been dominated by Walt Disney Co. and Nickelodeon parent Viacom Inc.

The Hub, which was stocked with Hasbro-produced programming, has been profitable. Several shows have mustered an audience, including “My Little Pony” and “Littlest Pet Shop.”

The channel also gained in distribution: It is now available in 70 million homes in the U.S., up from 56 million homes when the channel launched in October 2010.

However, audiences were not as big as the partners had hoped, and the children’s market has become even more challenging.

Many parents these days prefer to have their youngsters watch cartoons and other programs streamed on Netflix and Amazon, free of commercial messages, rather than the basic cable TV channels. In addition, since the Hub launched, restrictions on commercials that run in children’s shows have increased, which has reduced the ad dollars available.

Discovery and Hasbro said Thursday that the Hub will be renamed on Oct. 13. The channel will continue to run Hasbro programming during the daytime, but the evening hours will be turned over to programming that should appeal to adults as well as children. Themes will include natural history, animals and adventure — Discovery’s bread and butter.

As part of the deal, Discovery agreed to pay Hasbro $64.4 million to increase its equity stake, according to a regulatory filing by Hasbro.

Discovery’s stake increases to 60% and Hasbro’s interest decreases to 40%. Hasbro will continue to provide its programming, but Discovery will take over the management of the channel. Its headquarters will shift to Discovery’s huge complex in Silver Spring, Md., although some staff members will remain in Burbank.

Veteran programmer Tom Cosgrove will become general manager of the Discovery Family Channel and will report to Henry Schleiff, who serves as Discovery channels group president.

Under this week’s amendment to Discovery and Hasbro’s agreement, Hasbro pledged to provide an undisclosed number of hours of its Hasbro Studios programming each year. The channel will pay license fees for the programming. In addition, Discovery will receive fees for the shows that it provides for the prime-time block that come from other Discovery channels and the company’s vast library.

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