How Valuable Are MetLife's Rights To Snoopy?

May. 5.14 | About: MetLife, Inc. (MET)


Since 1985, the Charles Schulz Peanuts characters have been ambassadors for MetLife Inc., frequently appearing in their commercials.

MetLife has exclusive rights to the Peanuts characters in the financial services industry.

MetLife may have a lot of other good qualities that make it a solid investment even if they lose the rights to Snoopy.

In late 2006, Former CEO of MetLife Inc. (NYSE:MET), C. Robert Henrikson, came to an agreement with United Media to extend the company's license for usage of the Peanuts characters worldwide. However, this agreement expires sometime this year. Whether the new CEO, Steven Kandarian, plans to extend or renew the contract remains to be seen.

The Peanuts characters are coming out with a new movie in 2015. This extra exposure and publicity could serve as a benefit to MetLife's image if it is still associated with the Peanuts characters next year.

While the exact amount that MetLife pays for usage of the Charles Schulz Peanuts characters is not publicly known, it is widely believed to be around $12 million annually, a miniscule amount for a company that collects billions in revenue.

Insurance and financial companies can easily be perceived as cold and uncompassionate, as the media often portrays them as wrong-doers who try to defraud their customers. MetLife has attempted to combat this image with a marketing campaign involving Snoopy and the MetLife Blimp. MetLife uses characters from the Peanuts cartoon strip in many of its advertisements, creating brand recognition that is associated with warmth, charm, happiness, humor, charisma, and respect. MetLife licensed the use of Snoopy because he is instantly recognizable, universally liked, with a generally positive image. The company also leases two blimps, Snoopy One and Two, which fly around the country to different events throughout the year. This innovative marketing campaign creates brand recognition and urges consumers to consider managing uncertainties today rather than waiting until problems arise.

MetLife has used the Peanuts characters in the majority of their advertisements, but the company has launched some commercials without using them. This shows that MetLife can still function independently from Snoopy's image.

From an investment perspective, it is impossible to know how much money in sales the usage of the Peanuts characters generated for MetLife Inc. The increase in sales may have been very significant, but my educated guess is that it was a modestly small percent based on the fact that MetLife has had a great reputation as an industry leader even before Snoopy ever existed.

There are other trends and factors that may still make MetLife a solid investment even if they abandon Snoopy as their iconic mascot. MetLife has a lot of strengths and assets working in their favor.

One of those valuable assets is the naming rights to MetLife Stadium in East Rutherford, New Jersey, which is still in the early years of a 25-year contract. Having their name on this stadium helps promote the company's image and name recognition in a positive way. It is the largest stadium in the NFL in terms of permanent seating capacity, and it is the only stadium to be shared by two NFL teams; the New York Giants and the New York Jets. MetLife Stadium is also frequently targeted as a destination to host some of America's most significant sporting events; just this year they hosted Super Bowl XLVIII, and last year they hosted WrestleMania 29.

Even if MetLife has a future without Snoopy; it may actually be the ideal time to invest in MetLife as the company benefits from two very powerful secular trends:

-Rising Interest Rates: Currently at historic lows, interest rates have nowhere to go but up, and the federal reserve has indicated that rates may begin to go up during the next year or two. MetLife manages a portfolio of about $500 billion, 71% of which is invested in fixed-income securities. Rising interest rates may allow MetLife to yield a higher return on the float they collect from insurance premiums.

-Aging Baby Boomers: Over the next decade, aging baby boomers are expected to generate high demand for various insurance and wealth accumulation products involving retirement planning and annuities. Increased longevity means that this group will need to generate enough wealth to last decades into retirement. MetLife is very well positioned to take advantage of this demographic shift because they are a very well-established insurance company with a diversified portfolio of products.

Value Price: Another reason why MetLife may be poised for a bright future is the discount value price that their stock currently trades at; 1.1 times book value. While the S & P 500 is hovering around its all-time-high, MetLife trades at a 26% discount from its high in October 2007. However, there may be other insurance companies that are even cheaper; American International Group (NYSE:AIG) trades at 76% of book value. Genworth Financial (NYSE:GNW) trades at 57% of book value. Although there are insurance companies that are priced lower than MetLife, the slight premium MetLife trades at may be justified due to the company's stronger history of stability and established quality brand image. Nonetheless, MetLife still trades at a value price that is below historical norms.

Summary and Conclusion:

If the contract does not get extended, it will not be the end of MetLife. The company has a lot of trends and factors that will allow it to thrive for years to come. However, as a qualitative investor, I certainly hope they agree to extend the contract, and I believe they are likely to do so based on the fact that they have extended it in the past. Snoopy is a very valuable asset to MetLife, but one character alone doesn't make the company as a whole.

Disclosure: I am long MET, AIG, MKL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.