With the Learning Company deal, Mattel hopes to expand its high-tech toy offerings. It currently produces only a handful of CD-ROMs tied to its leading brands, like Barbie, Hot Wheels and Winnie the Pooh. But its young interactive business is strong. Mattel isn't the only retailer looking at technology for the next phase of growth. This year, Hasbro bought hand-held electronics maker Tiger Electronics Inc. and MicroProse Inc., an entertainment software company.
Toys are no different.
Mattel also hopes The Learning Company deal will help it forcefully enter new retail channels that it was unable to penetrate before. About 14 percent of The Learning Company's sales come directly from consumers, and starting in 1999, Mattel plans to offer all of its brands in catalogs and the Internet. Earlier this year, Mattel purchased The Pleasant Company, which makes the very popular line of American Girl dolls, books and clothes that are mostly sold through direct mail. In addition, Mattel sees a big opportunity in The Learning Company's ties to schools, where it is the leading software distributor, and its relationships with specialty toy merchants like Noodle Kidoodle and Zany Brainy, which have shunned mass-market brands in the past. The Learning Company deal is expected to be completed in April 1999, pending shareholder and federal regulatory approval.