Oak Brook, Illinois-based RC2 Corporation will pay HIT Entertainment US$15 million in exchange for a release from indemnification claims related to last summer’s recall of certain Thomas & Friends licensed products.
The agreement also extends the term on RC2 and HIT’s licensing agreement for the Thomas & Friends Wooden Railway product line, while at the same time reducing the royalty payments on the wooden toys and shortening the term of the licensing agreement for the mass-market oriented Take Along Thomas & Friends die-cast product line.
RC2 expects the one-time payment and reduced future profits from its shortened product line will be offset by the reduction in licensing fees being paid to HIT.
Interestingly, RC2 states that the new arrangement with HIT, ‘clarifies that there are no contractual restrictions related to the development of toy products for Chuggington,’ the CGI preschool series from Ludorum set to launch on the Beeb in 2009 that revolves around a set of locomotive trains. An RC2 affiliate holds an ownership stake in the series and its Learning Curve division holds master toy rights.