Montreal: By boosting the volume of production, distributors will have the product line and leverage they need to get animated feature films into theaters, says Nelvana chairman Michael Hirsh.

Hirsh says underproduction has been a historical problem for independent producers and an issue which will be addressed by United Animation plc, the sole all-animation movie entry in the running for u.k. National Lottery funding, with Nelvana as its North American anchor.

Nelvana is joined in the ua consortium by British producers Martin Gates Productions, Jerry Anderson’s Inimitable Ltd., Cosgrove Hall Films and Carrington Productions International, a financial backer of film and tv.

The group has applied for $66 million in lottery funding, with plans to produce three animated features a year over several years at a cumulative cost of $202 million. The films will have budgets in the ‘lower $3 million to $10 million range.’

The u.k. lottery scheme ‘is a genius idea,’ says Hirsh, with plenty of exciting potential for animated movies based on ‘the success Disney has enjoyed with some of their major movies and the recent success of Beavis and Butt-head as a lower-budget animated movie.’

Two other Canadian companies are in the running for National Lottery funds, Alliance Communications as part of the Studio Pictures consortium and Paragon Entertainment via HandMade Films, which is part of the Primary Pictures group. Winning franchises will be announced by the Arts Council of England in May.

With Nelvana as the consortium’s North American anchor, some of the features will be Canada/u.k. coproductions, says Hirsh.

‘I think the group is leaning on us for our expertise in evaluating the American market, the viability of projects, and the potential for worldwide sales,’ he says.

Nelvana has an established tv presence in the u.k. with shows such as Rupert, a top-rated itv program, and Blazing Dragons, and currently has several important u.k. characters under licence or option including St. Trinian’s and Thelwell.

‘If you think of a Canada/u.k. coproduction, we could trigger quite a bit of money with two million pounds coming out of the lottery,’ says Hirsh.

Nelvana has two animated feature films in production, Pippi Longstocking, a $10 million production based on the classic Astrid Lindgren books and coproduced with Svensk and Betafilm Gmbh, slated for delivery this summer, and Babar: The King, the company’s second Babar movie entry. Two other movies are in development.

On the distribution front, United Animation has a release arrangement with ABC Theatres, an exhibition chain in the u.k. More networking comes from Cosgrove Hall, owned by Itel, a London-based distributor which is owned in turn by broadcasters in the u.s. (hbo) and the u.k. ‘I think basically each movie has to be placed with an appropriate distributor,’ says Hirsh.

Hirsh says he doesn’t anticipate a new structure for Nelvana’s feature film slate, but says it could participate creatively on projects developed by other consortium members.

The company’s animated feature film slate dates from the early 1980s and includes three Care Bear movies, including the ’85 Golden Reel winner, the box office hit Rock & Rule, and Babar: The Movie, a 1990 ACE Award and Houston Gold Award winner.

In December, Nelvana raised $20.7 million through the sale of 900,000 subordinate voting shares, including 585,000 shares from treasury and 315,000 from senior management.

The company has a representation office in London and is a joint-venture partner in Studio Ellipse, a production facility in Paris.