A new combined entity would have pricing power that it could use to negotiate with entertainment studios and over movie and television franchises.
The terms of any possible deal "couldn't be learned", the WSJ said, and it is not clear if the approach will move forward.
Hasbro Inc. has made a takeover offer for rival Mattel Inc., according to people familiar with the matter, a potential combination that would unite the two biggest US toy makers and put Barbie and G.I. Joe under the same roof.
Most kids don't care about the difference between Hasbro and Mattel - and according to new reports, the two companies might soon become one.
Hasbro and Mattel declined to comment.
Hasbro, Inc. shares closed at $91.45 on Friday, up $2.76 (+3.11%).
CEO Margo Georgiadis, who took the reins in January, has warned the business would miss its revenue forecast for the full year.
One analyst in the toy industry said that both companies would enjoy benefits from merging, but stockholders at Mattel may oppose such a deal that valued their company on a recently depressed share price.
Hasbro and Mattel have had talks several times over the years, including in 1996 and again sometime in late 2015.
Hasbro's stock rose 18 per cent this year, and the company has a market value of $11 billion - more than twice that of Mattel.
That deal would have given Hasbro a direct pipeline into Hollywood, with more movies and TV shows tied to its toy brands.