Chaotic's launch shrinks 4Kids' coffers
By Staff -- Playthings, 5/12/2008 8:55:00 AM
NEW YORK—Costs related to establishing Chaotic, the self-created television series and web-enabled trading card game that 4Kids Entertainment believes will become its “main growth driver” for the next several years, took their toll in the first quarter, helping swell its net loss to $6.4 million.
“Our first quarter results reflect the continued investment in the development of our new initiatives, including a year-over-year increase of $3.6 million in selling, general & administrative expense and costs associated with our Chaotic trading card game and website subsidiaries, as well as decreased licensing revenues from some of our more established properties,” said Alfred R. Kahn, 4Kids’ chairman and CEO.
In the corresponding period of 2007, 4Kids' net loss was $200,000.
In addition to direct expenses and revenue declines, the company said its financial position was negatively affected during 2008's first quarter by conditions in the market for auction rate securities (ARS). During the first three months of 2008, 4Kids recorded a reduction in its equity of $9.2 million due to the decline in market value of its portfolio of ARS. At the end of the first quarter, its ARS had a market value of approximately $39.0 million.
On the plus side, the company tallied $2.4 million in sales for its new Chaotic trading card game, which helped overall net revenues remain positive, up approximately $100,000 from the $14.9 million tallied in the corresponding period of 2007.
According to Kahn, more than 1 million unique visitors have gone to Chaotic’s website, where they have registered more than 15 million cards.
Looking forward, the company will expand its TV lineup for the 2008-09 broadcast season to encompass 50 percent of all children’s broadcast television programming on Saturday mornings, including a five-hour block on the CW Network and a four-hour block on Fox.
4Kids’ CW agreement, announced in October 2007, will “provide us with greater visibility for our hit children’s entertainment programming and a more favorable cost structure than our existing agreement with Fox,” said Kahn of the expected benefits of its programming moves.
“We also expect to introduce some exciting, new properties at Licensing Show in New York in June,” he concluded.
