Major Deals, Acquisition Mark Growth Spurt for Animator DIC

By DARRELL SATZMAN

Staff Reporter

Eighteen months after extricating itself from Walt Disney Co., Burbank children’s television producer DIC Entertainment has signed its two biggest deals and is poised to announce the first of what company officials said would be several acquisitions.

In a bid to expand its merchandising business, DIC has struck a deal to acquire an East Coast company with a product line aimed at infants to three-year-olds. It would not identify the company, but indicated that the deal, set to close this week, was valued at around $5 million.

The acquisition caps a frenetic stretch for DIC, which earlier this month signed an $80 million contract with Viacom Inc.’s Nickelodeon cable network to deliver 39, 90-minute animated movies over the next three years.

It also inked a pact this month with Fox Television to provide 2 1/2 hours of educational programming every week for four years beginning this fall. Under the terms of the deal, DIC will offer Fox programming from its library in exchange for the right to sell half of the commercial time during those shows, about three minutes per half hour.

“This was an important deal for us in terms of assuring slots on a major network that we will have for the next four years,” said DIC President Brad Brooks. The Fox deal, he said, “allows us to utilize our catalog, which is obviously a higher margin of business than having to create new programming.”

Home to children’s titles like “Madeline,” “Inspector Gadget,” “Stargate” and “Sonic The Hedgehog,” DIC owns more than 3,000 hours of programming, one of the largest animation libraries in the world. Its programs air on ABC Family Channel, the Disney Channel, Cartoon Network and, starting in October, PBS.

Brooks said the Nickelodeon and Fox deals put DIC on pace to double revenues this year and again next year, to between $75 million and $100 million in 2003.

“Clearly, if you are an independent, the whole game is how you market and sell your properties to the networks,” said Nickelodeon Chief Operating Officer Jeff Dunn, who helped negotiate the deal with DIC. “They have a great library of well-known titles. Traditionally, we have not been a big movie network, but we thought this was a very compelling idea.”

Under the Nickelodeon deal, the network has exclusive rights to the programming for a year, during which it can air the shows up to four times. After the year, rights revert to DIC.

DIC, a French import founded in 1971, established a presence in the U.S. in 1983. It was sold to Disney in 1995 and bought out by its chairman and chief executive, Andy Heyward, in partnership with Bain Capital Inc., in the fall of 2000.

DIC recently acquired the rights to market American Greetings Co.’s “Strawberry Shortcake” character, which generated hundreds of millions of dollars from licensing deals during the 1980s but has disappeared from store shelves in recent years.

“Success for us requires a lot of opportunistic dealmaking,” Brooks said. “But we’re treading amongst giants here and you have to be careful where you step. Otherwise you might have a giant heal coming down on you.”