Hasbro Inc , the No. 2 toy company, posted a higher-than-expected quarterly profit on Monday, helped by lower costs and demand for toys linked to summer movies such as G.I. Joe and Transformers.

Hasbro also said that its recent tie-up with Discovery Communications Inc for a kids' television network and website would cost it less than it had originally thought, due to lower expenses.

Net profit rose to $39.3 million, or 26 cents a share, from $37.5 million, or 25 cents a share, a year earlier.

Its profit beat the average analysts' expectation for 23 cents a share, according to Reuters Estimates.

Sales rose 1 percent to $792.2 million.

Hasbro's bigger rival and Barbie owner Mattel Inc also posted a profit above Wall Street's expectations last week, helped by cost cuts.

This year, Hasbro has an advantage over Mattel with its lineup of toys tied to movies such as Transformers - Revenge of the Fallen and G.I. Joe - The Rise of the Cobra, which analysts expect will give its sales a much-needed lift in the recession.

The boost for Hasbro comes at a time when toy companies are battling shrinking need at retail stores, which are stocking fewer toys in line with weak consumer demand.

Hasbro's joint venture with Discovery includes a TV network and website that will carry children's programs featuring brands such as G.I. Joe, My Little Pony and Transformers and Discovery's own shows like Hi-5 and Bindi The Jungle Girl.

Because of lower expenses, the joint venture will hurt this year's profit less than Hasbro had thought, the company said. It now expects 2009 earnings per share to take a hit of 15 to 20 cents, while it had previously forecast the impact at 25 cents to 30 cents.

For 2010, it expects to take a per-share hit of 25 to 30 cents, less than the 30 to 35 cents forecast earlier.

(Reporting by Aarthi Sivaraman; Editing by Lisa Von Ahn and Gerald E. McCormick)