It sure looks like a sweet deal: E.W. Scripps (SSP), owner of the beloved Peanuts brand, is selling United Media Licensing to brand management company Iconix (ICON) and the estate of Charles Schultz in a $175 million cash transaction. Under the terms of the deal, which is expected to close at the end of the second quarter, Iconix will own 80% of the business, while the Schultz estate will hold the remainder. Though United Media owns the licensing rights to an array of brands from Dilbert and Good Night Moon, the majority of its licensing revenue is generated from deals involving the Peanuts characters. Retailers sell more than $2 billion worth of merchandise featuring United Media's licensed brands annually.
Although the news probably doesn't come as a surprise to many -- Scripps made it clear a couple of months ago that it was "exploring strategic options" for its licensing business -- the price might seem a tad low given that Iconix thinks it can generate $75 million in royalties a year from United Media Licensing.
One possible reason for the seemingly low price: The future value of the brand may be diminished by the fact that young people no longer read traditional comic strips like Cathy and Family Circus. Though Peanuts characters are still beloved by children, it's not because they read the comic strip in the newspaper every day as they might have in decades past. The majority of newspaper readers are 55 or older and newspaper circulation is steadily dropping. If children are familiar with Peanuts, it's more likely because they've seen the TV specials or the Peanuts-branded merchandise.
While many newspapers have nixed their stock pages and eliminated less popular sections of the newspaper, most continue to run decades-old syndicated comics for fear of alienating their readers, but young people aren't reading them.
"The whole newspaper industry is antsy," Tom Daning, managing editor for United Media, told CNN in 2006. "Many are scared to do anything to hurt circulation." Daning added that it's easier to drop a new comic strip than an old standard like Peanuts.
That doesn't mean some newspapers aren't trying. The San Francisco Chronicle said last month it was dropping the predictable slate of syndicated comics in its weekend supplement in favor of a roster of indie comics including Friendship Town.
"You won't find any Family Circus or Marmaduke in here," the newspaper said in a blog post announcing the change. "This page of full-color comics will also include several fun activities for people who hate comics."