nelvana’s us$40-million deal to produce six animated series for pbs’s new Saturday morning kids’ block is part of the company’s strategic plan to increase shelf space for its proprietary projects, gain a hold over the u.s. preschool market, and increase merchandising opportunities.

Under the terms of the three-year deal, Nelvana will produce six book-based series for the public network’s fall 2000 schedule, with pbs committed to commission a minimum two of the six series as daily strips (40 episodes) for its weekday PBS Kids Ready To Learn service in subsequent seasons. pbs has a penetration rate of 99% of all u.s. tv households.

‘Over the past few years, we identified a need to strengthen our shelf space, and this initiative was a result of that effort,’ explains Nelvana co-chief executive officer Michael Hirsh. ‘The first building block was our Teletoon deal – by investing in Teletoon, that gave us a certain amount of output in Canada – then, our deal with cbs for the Saturday morning kids’ block and our output deal with Teletoon in France.

‘Now, the pbs deal gives us a strong u.s. home for our programming and a large production block. We have the two highest-rated preschool shows on Nick Jr. – Franklin and Little Bear – and hope to have the same position on pbs. We have increased our amount of proprietary programming dramatically and [have] systematically been looking to get as much shelf space as possible for these shows.’

With Nelvana serving as merchandise licensing agent on four of the six character brands, Hirsh adds that the pbs deal is part of a long-term plan to build strong character brands with sustainable merchandising and ancillary revenue potential. Nelvana has a percentage of rights in the remaining two properties, (Corduroy and Timothy Goes to School) with Viacom and American company Simple respectively. pbs is also participating in merchandising revenues.

Projections for Nelvana’s 1999 merchandising revenue are in the $6-million range, as compared to the $3.8 million generated last year. Revenues are expected to reach $9 million by the year 2000. The benefits of the pbs deal are anticipated to start in 2000 and 2001.

All of the new series for pbs are based on already successful literary properties: Maurice Sendak’s Seven Little Monsters, in which a group of 10-foot-tall monsters teaches social skills and problem solving; William Joyce’s George Shrinks, featuring a three-inch-tall character who celebrates the power of being small; Rosemary Wells’ Timothy Goes to School, chronicling the dilemmas of a bashful five-year-old learning the importance of self-confidence; Don Freeman’s Corduroy, taken from the point of view of an urban child who discovers the many sights, sounds and smells of the city; Michael and Betty Paraskevas’ Junior Kroll and Company, teaching young kids to solve problems and recognize their accomplishments; and Andrea Beck’s Elliot Moose, a combined live-action/puppetry/animation project featuring characters who sing songs, tell stories and play with toys that magically come to life.

The new series will be a mix of coproductions with Asian and European partners, says Hirsh. Financing will also come by way of u.s. corporate sponsors eager to reach the preschool market, as well as international sales. Nelvana holds world distribution rights (outside of the u.s.).

Nelvana’s two-year agreement with cbs to fill the network’s Saturday morning cartoon schedule is up for renewal next January. The deal called for the production of six animated series, worth more than $28 million in budgets.

‘We are having conversations with them; we are exploring how to continue that relationship,’ says Hirsh regarding the potential of renewing the agreement. The success of the first season – still under way – will also determine any future deals. So far, the new animated series have improved the morning block’s ratings by 33%.

Nelvana’s share value has been dropping over the past year, and Hirsh says the pbs coup should provide increased confidence to investors.

‘This deal strengthens our 2000 and 2001 slate and shows the company is aggressively moving forward not only to build its slate, but also to solidify its importance as a supplier to leading broadcasters and find strong merchandising opportunities.’