Internationally acclaimed English animation studio Cosgrove Hall Films has come a long way in 25 years. From Danger Mouse to Count Duckula, from Foxbusters to Fetch the Vet, its work in drawn and model animation is long established as a guarantee of genuine quality just about everywhere children’s television is broadcast.

But in the next quarter century, the company that began life in 1976 as the brainchild of animators Mark Hall and Brian Cosgrove, operating with a crew of six out of a converted Manchester tobacco warehouse, will have to work harder still.

In common with animation studios everywhere, Cosgrove Hall needs to reposition itself to take full advantage of the new digital world and the opportunities that could ensure an even brighter future.

Cosgrove may be Europe’s biggest and most successful animation studio-turning out some 1,500 TV properties to date-but as managing director Iain Pelling explains, the entertainment business is a far less cozy place than it was 25 years ago. The studio needs to move into new markets if it is to keep revenue streams flowing.

Says Pelling: ‘It’s not like the old days when someone would say `Another series of Danger Mouse, please.” Nowadays it’s much tougher. License fees have been coming down, although they now seem to have stabilized. ‘Broadcasters want more for their investment. To get a show off the ground you’ve got to have a merchandising and licensing forecast, whereas it used to be seen as gravy. Finance is harder to raise. Generally, the number of slots for children’s animation isn’t increasing. All of this makes it much tighter in the children’s TV arena, and animation doesn’t come cheap.’

Pelling, a trained accountant and former number cruncher at BBC Entertainment, has been running Cosgrove Hall since last year. The company is still based in Manchester and is now housed in 25,000 feet of custom-made studio space with state-of-the-art equipment and a full-time staff of about 50, many of whom have been there since the beginning.

But the complex politics of U.K. broadcasting means that Pelling is now employed by Granada, the ambitious British media combo that acquired control of Cosgrove Hall last year after buying out United Media’s TV assets; Hall and Cosgrove each retain minority stakes.

Granada recently went into the red following a slowdown in advertising and the high cost of investing in pay-TV service ONDigital. As a result, the company is watching the bottom line more closely than ever in a determined effort to boost sagging investor confidence. Granada, the U.K.’s oldest independent TV company and its biggest producer after the BBC, is likely to pay very close attention to Cosgrove Hall’s costs in the near future.

Nevertheless, the outfit is not averse to taking creative risks. This, with luck, should help foster a good match with Cosgrove Hall. Pelling is upbeat about the relationship with Granada, which has a respectable portfolio of kids programs (including My Parents Are Aliens and Tom and Vicky), licensing and merchandising expertise, and long-established distribution and co-production credentials via Granada International.

There are all kinds of synergies between the parent company and its new offspring, including a Manchester HQ and Granada’s experience in live action that could one day end up on the same screen as a Cosgrove Hall animated sequence. ‘The Granada people are very proud of Cosgrove,’ Pelling says. ‘They understand that we sell internationally. They’re a well-known broadcasting brand. The relationships will continue pretty much as before except that it’s now Granada, rather than United. We’ll be developing our own ideas and co-productions as much as ever. Granada hasn’t done a lot of animation, so we’re a little bit cautious about where we go.’

For the time being, the strategy developed under United looks likely to survive. This involves pushing as much animation through the studio as possible, both in-house productions and so-called ‘for hire’ work for third parties; increasing Cosgrove Hall’s international presence via co-productions and sales; expanding the emphasis beyond preschool material; moving into fresh areas with the opening of a commercial production division; and exploring new avenues in such entertainment sectors as video and on-line games and large-format films.

Feature films provide another, albeit high-risk, road to expansion. To date, Cosgrove Hall has completed only a handful of feature-length films, including The BFG, a flick that was never released in theaters as initially planned, but which covered its production costs via video sales.

Cosgrove Hall Digital, set up last year, also offers considerable potential. ‘We are very good in some areas,’ says Pelling, with some understatement. ‘We’re probably the best in the world in stop-motion, and we’re up there with drawn animation, but we’ve got to build on those strengths. The way forward is to make sure we’ve got all bases covered.’

Pelling aims to have between four and six series in production and up to 30 ideas in development at any given time. ‘This averages out at about seven hours a year, which is a large output for an animation studio,’ he says. In fact, Cosgrove Hall prides itself on being able to produce high-quality animation reasonably quickly. ‘I remember when Mark and I started,’ recalls Brian Cosgrove, ‘animators would say that if they were lucky, they’d produce two seconds of a film a day. For us, 30 or even 45 seconds a day was the norm.’ Even so, each episode of Bill & Ben, the stop-frame preschool series made by Cosgrove Hall for the BBC (a third batch of 13 10-minute episodes is currently in production) takes four animators about two weeks to complete.

In the old days when Thames Television (subsequently bought by Pearson after losing its broadcast license) owned the studio, its projects were fully financed. This is unheard of in today’s multi-channel world, and Cosgrove Hall has been forced to seek out international partners. ‘These days, even getting a U.K. broadcaster onboard is tough,’ says Brian Cosgrove. ‘The potential is there,’ Pelling explains, ‘but you’ve got to be able to be flexible and react more quickly. This is one reason why we’re starting to blur the boundaries in the studios between drawn and model animation and CGI.’

CGI techniques used in Cosgrove Hall’s recent hit Fetch the Vet, which has now sold into about 15 territories including the U.S., Germany, France and Italy, have brought down costs, enabling the studio to, among other things, create sets digitally instead of having to physically build them. Even so, it is important to remember the international dimension. ‘When we designed the farm for Foxbusters,’ Pelling recalls, ‘it had to be a farm that worked as a farm in Germany and the U.S., as well as in the U.K. You can’t be too parochial these days. That’s one of the biggest changes in our business.’

Although, if digital technology is bringing costs down, talent costs continue to soar. ‘To position a property in the U.K. and the U.S. you need to have a big name attached,’ insists Pelling. Gregory’s Girl star John Gordon Sinclair voiced Fetch the Vet, while Whoopi Goldberg was featured in Foxbusters.

Thankfully, the studio has adopted a cautious approach to its Internet activities and has avoided getting its fingers burned in the dot.com crash. Says Pelling: ‘United was very financially focused and rightly asked, `Where’s the payback for us?’ What we have done is support our own sites for the time being, rather than doing anything more ambitious. I am not convinced by the argument for putting shows on the web first and then getting a broadcaster to buy them. Broadcasters want to buy programs that are designed for them. The biggest challenge for us is carving out a niche in a world where the big studios are having a rough time and where everyone thinks they can do animation. We’re trying to maintain our high-quality threshold and say, `You can trust a Cosgrove Hall show and spin off successful merchandising and licensing on the back of it.’ We’ve got to keep those commissions coming in and cover all sectors of the market.’

What, then, is the secret of Cosgrove Hall’s extraordinary success and survival despite all the changes and upheavals of the past 25 years? ‘It’s a tricky one,’ says Brian Cosgrove, who retired last September after staying on for an extra 18 months to set up Cosgrove Hall Digital. He thinks there is, however, one important factor that sets Cosgrove apart from other British animation companies-location.

‘Being in the north of England has worked in our favor because it’s enabled us to develop our own styles without being influenced by other people, and it has also allowed us to find out what was inside each of us,’ he says. ‘Most animators and animation studios are in the south. These are mainly hard-nosed guys who make commercials. It’s difficult to imagine them going into the pub at the end of the day and telling their mates they’ve just been working on a new episode of Noddy. Some people may regard making children’s animation as a bit wet, but I’ve always thought that it occupies an honorable platform within entertainment production.