In children’s television, a new audience is born every five years, according to Hollywood wisdom.
Producers who can’t wait that long should move their show to China, according to Tom Lynch, and this summer he’s doing just that.
The producer behind Nickelodeon’s “Romeo!” and the upcoming Cartoon Network show “Class of 3000,” Lynch will shoot 13 half-hour episodes of a series in Hong Kong. He describes the show as a kung fu adventure spoof; the title remains under wraps.
No one can argue the power of the Chinese youth market. According to a 2005 population estimate, China had 274 million people under the age of 14. That was roughly equal to the entire U.S. population (296 million in 2005).
But Lynch’s global aspirations hinge on syndicating the show to TV carriers in the U.S, Europe and Latin America, to finance and provide sales momentum for his Asian foray.
“It will be the first kid’s series in China that would export out,” he said.
Lynch, who produced Nickelodeon’s Kids Choice Honors award show in Beijing last year, spent a year traveling in China to learn the culture and production industry. He found that language a major barrier in moving manufacturing operations overseas wasn’t such a problem. Most of the people in TV production and the larger entertainment industry speak English. For his show, he plans to shoot every scene twice English for export, and Mandarin for the local market.
Instead, the major obstacle was a lack of market data on Chinese youth. When trying to determine what entertainers Chinese children would like as guests or hosts on the awards show, Lynch discovered that “getting quantifiable research is a new process, a whole new territory.”
In working on shows in Africa, China, and the U.S., Lynch has come to believe that children everywhere respond to certain types of stories, which explains why fables and folktales bear similarities across cultures.
“I have found a commonality with young people from the crib to age 16. There’s a sense of irreverence, a sense of wonderment and a sense of fun” he said. “If you can put fun and adventure together, you have a global point of view for kids.”
For other chief executives looking to capitalize on China, Lynch advises that patience is the first virtue. “Second, see how you can fit in, rather than what you can change. And third, keep a sense of humor.”
If all goes well, the next market in Lynch’s crosshairs could be India. The country currently supports seven children’s TV networks. With an under-14 population of 337 million children all English-speaking its market potential dwarfs even China.
Smulyan’s Private Victory
Media entrepreneurs who dream of taking their company public should consider the career trajectory of Jeffrey Smulyan, chief executive at Emmis Communications Corp. The Indiana-based businessman announced a plan last week to take his company private.
After earning a law degree from USC, Smulyan ran radio stations in Indianapolis and Omaha. He founded Emmis in 1980 and went public in 1994. The company grew to include 25 radio stations, 16 TV stations, and six regional magazines. Here in Los Angeles, Emmis owns KPWR-FM (106) and country music station KZLA-FM (93.9), plus Los Angeles and Tu Ciudad magazines. Along the way, Emmis owned Major League Baseball’s Seattle Mariners for two seasons and last year offered to buy the Washington Nationals.
So why take a textbook success private? Because Smulyan feels the world doesn’t appreciate his creation, and he may be right. At least the supposed rationality of the market doesn’t seem to work here.
Before the announced buy-out, Emmis stock traded for $13.43. Smulyan offered $15.25 a share, but the price quickly jumped to $16.25 based on the conventional wisdom that an opening offer is a low ball.
Then the market reacted with confusion. Lehman Bros. analyst Anthony DiClemente recommended that clients sell into the strength of a $16 share price. Bear Stearns upgraded the stock to “outperform” and set a target price of $17.50.
It all comes down to valuation. Smulyan’s offer values Emmis at $567 million. Subtract the 20 percent of the company he already owns, and he would have to spend $453 million to own Emmis outright.
In addition, the company has $792 million in debt and $140 million in cash. On the same day the company announced Smulyan’s offer, it sold an Orlando TV station for $217.5 million and a Phoenix radio station for $77.5 million. Throw those numbers in and it turns out Emmis would need to fetch about $810 million to justify Smulyan’s offer.
The company still owns 23 radio stations, two TV stations and four magazines. Are they worth $810 million? It looks like a reasonably safe bet.
Sometimes the glory of going public isn’t worth the price. The true entrepreneur prefers the private satisfaction of a well-stocked bank account.
Surveys at Home
Online Testing eXchange has launched a global Home Entertainment Monitor survey to measure consumer interest in future DVD releases. The weekly monitor helps DVD distributors and retailers track their audience and adjust their marketing plans in real time.
To produce the monitor, OTX surveys 500 active DVD buyers ages 13 to 49 in five countries (United Kingdom, France, Germany, Australia, Japan and the U.S.) for a total sample of 3,000 respondents. DVD buyers are defined as people purchasing two or more DVDs per year.
“This year we expect to see considerable change in the marketplace with the growing availability of legal downloads and the advent of high definition disks,” said Ian Wright, managing director of European operations for Los Angeles-based OTX. Currently, the monitor is the only tracking service that provides global data for the home entertainment market on a weekly basis.
The Home Entertainment Monitor complements OTX’s package of weekly trackers for film, TV, video games and mobile technology.
Staff reporter Joel Russell can be reached at (323) 549-5225, ext. 237, or at
[email protected]
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