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Nelvana Limited

In 1972, 2 York University graduates Michael Hirsh and Patrick Loubert and a British animator-designer Clive Smith decided to pool their talents and founded a company called Nelvana in Toronto, Ontario. Their earlier collaborations were marked by their commitment to experimentation and technique and a desire to redefine the audience's perception and expectation of the medium of animation. According to Hirsh, CO-CEO, the trio started out with minus ten dollars with only their credit cards to finance their venture. 28 years later, at the height of the company's success, the three are still working together to bring the magic of animation to audiences around the world.

Aside from its head office in Toronto, Nelvana Limited also has an executive headquartered in Tokyo as well as sales offices in Los Angeles, London and Paris. Approximately 500 employees work for Nelvana, now the world's leading independent animation production, distribution and merchandise licensing company specializing in animation. In the areas of programming, the company handles animated television series, specials and feature films.

As such, Nelvana is the international distributor to the global television marketplace. It has accumulated a growing collection of more than 600 half-hour episodes with a current commitment of at least 130 new animated episodes and live-action programming. Its programming has been licensed to more than 180 countries around the world. In fact, almost every one of the company's shows exhibits the same impressive distribution. "We probably have the best market penetration on an export-basis of any Canadian television distributor," Hirsh speculated.

In 1977, a breakthrough project called A Cosmic Christmas kicked off the success for the three gentlemen. The project caught the attention of George Lucas, who at the time was looking for a company to produce a ten-minute animated segment for a Star Wars television special that he was producing. Lucas chose Nelvana for the job and continued to work with them throughout the 80s to produce his animated series Ewoks and Droids. Later, Nelvana went on to produce other series such as Rupert, Babar, The Adventures of Tintin, Care Bears, Little Bear and Franklin, familiar series that have established the company as the leader in children's animation.

Hirsh identified the latter characters, Franklin and Little Bear, as being the company's current successes. These two shows are currently the top rated shows on the US Nickelodeon Junior network. Hirsh believes Franklin "will turn out to be the most successful Canadian licensed property ever. It's in its first year of licensing and merchandising so it's in its infancy but the market receptivity has been excellent." In August 1998, Nelvana acquired Kids Can Press, a Canadian publisher of children's literature including the acclaimed Franklin books. Of this acquisition Hirsh said, "Many of our TV shows are based on children's books so we felt that it would help us in our core business of producing children's shows. And, as a Canadian company, having a good source for original Canadian children's ideas was another motivation." He also reported that the company's Little Bear merchandise lines are doing wonderfully. Nelvana's first prime time show Bob and Margaret, a Canada-UK co-production, has received big ratings for the company both in Canada and the US and Rolie Polie Olie, Nelvana's 3D computer animated series, was nominated for an Emmy. "The company has always been very focused," said Hirsh, "We have a core business. We've stuck primarily to our core business - animation. We've always put an emphasis on quality and that quality in the long run pays off. The company is known for producing quality children's productions."

It is evident that Nelvana's presence is firmly entrenched in the international market. According to Hirsh, 80% of total sales comes from outside of Canada, with 40% allocated to the US and 40% coming from other foreign territories. Nelvana's most important markets are the UK, France and Germany, although the company co-produces with numerous companies around the world and has partnerships with German, French and Spanish broadcasters and producers. "We had an unprecedented success for an independent production company this past year," recalled Hirsh, "We gained control of the CBS's Saturday morning lineup and unilaterally programmed it. We're the only independent company to program an entire network of programs. We're doing that for a 2nd year in a row and we've increased the rating over what they did prior to our entry by 33%."

Establishing partnerships and maintaining relationships is an integral part of Nelvana's marketing and promotion strategy. Nelvana's representatives attend more than 12 trade shows per year such as MIP and MIPCOM in France, an international film and programme market for TV, video, cable and satellite, and various merchandising and licensing shows. However, Hirsh quickly points out that this combined with the work that Nelvana's employees perform from their foreign offices are responsible for the company's international renown and financial prominence. 1998 revenues increased by 40% over 1997s and net earnings showed an 85% increase over those of 1997s for staggering totals of $75M and $8.6M respectively. "I think we're doing an excellent job. We have no choice but to do a better job next year," he laughed.

Despite these impressive figures, Hirsh believes that Nelvana is dwarfed by its competitors on a David and Goliath basis. Nevertheless, Hirsh is very satisfied with the way his own company has been solidly competing with its counterparts. "The biggest reward is to survive as David and slay the giant," he said. Hirsh remembered Nelvana's earlier days of financial struggle and spoke about the financial assistance he recieved from the Ontario government and Telefilm Canada, such as the assistance provided for foreign language dubbing. Hirsh also recalled attending a trade mission to France and meeting with Canadian consuls in New York, Los Angeles, Tokyo and Paris. "When we made our first sale to the US, the Canadian consul in New York was extremely helpful. He provided me with an office and facilities for screening and reception. We've been able to make good use of some of the consults," he agreed.

Just when it seemed like the company can not possibly grow any bigger or become any more successful Hirsh and his management team come up with a plan to propel Nelvana's success to unimaginable heights. "We're looking at exponential growth for the company over the next 5 years. We think the company is in a take-off position," he began, "We want to solidify our position as the number one independent animation company in the world and we want to diversify the company so that we're more vertically integrated. Finally, we want to broaden our income stream so that licensing and merchandising is a significantly bigger proportion. We think that that is doable." And judging from Nelvana's unwavering track record, who can argue with that?

Michael Hirsh,CO-CEO
Nelvana Limited
32 Atlantic Ave.
Toronto, Ontario M6K 1X8
Tel: (416) 588-5571
Fax: (416) 588-5588
Interview Done: April 7th, 1999.

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