Kids television producers are facing their toughest commercial challenges in years. A combination of stagnant advertising revenues, global stock market turmoil and production over-capacity means money for new shows is as scarce as it has ever been.

What’s worse, broadcasters with budgets for original shows are using their market power to grab control of ever more property rights. For producers, the result is that even if you get your show on air, there’s a chance your one long-term asset will end up feeding a corporation’s bottom line instead of sustaining your own business.

Yet through it all, the kids sector in Europe and North America continues to welcome new independent entertainment companies – many headed by industry veterans well-schooled in the cutthroat world of results-driven production.

In some cases, this new breed of indie emerges as the result of a merger or cutback that has made a senior manager surplus to requirements. In others, it is disenchantment with the rigid targets set by shareholders that has driven execs out the door. And just as often, it’s a desire to retain control of potentially lucrative IP rights.

Toronto, Canada-based Joan Lambur & Associates typifies the trend. Until recently, Lambur was president of on-screen entertainment at preschool specialist The itsy bitsy Entertainment Company. TibECo’s financial woes were well-documented in the latter half of 2001, culminating in the beleagured company halving its 65-strong staff and losing its founder, CEO and chief creative officer Kenn Viselman. Today, Lambur’s payroll consists of herself and trusted partner Suzanne Wilson – formerly itsy bitsy’s senior manager of on-screen entertainment, television.

Lambur says the biggest downside to her new set-up is the lack of specialist in-house support. ‘At itsy bitsy, I could go to any division and draw on its expertise. Now, we do everything – including sending our own packages.’ But Lambur doesn’t begrudge this because her independent status allows her to construct non-traditional creative relationships. ‘The upside to a recession is that you uncover amazing talent looking for innovative partnerships. I’m not constrained by the needs of divisions, so I can look at any deal.’

Lambur’s business structure is two-sided. On one hand, she’s focused on seeking out raw talent and new ideas. Because she does not have the resources to bid against the big animation studios for book properties, she is casting the net far and wide for original concepts. This can be ‘a time-consuming process that takes you to bizarre meetings,’ admits Lambur, ‘but it also throws up great ideas from people with no preconceived agenda.’

Among the concepts she’s taken on so far is Tallulah Bighead, a Flash-animated project for the six to nine set presented by two Canuck graduate students. Canadian kidcaster YTV has already expressed interest in the concept, which follows the adventures of a big-headed private detective, and Lambur is currently trying to drum up international broadcast interest. Another project in early development is Leonard the Monkey, a 2-D/3-D preschool series that Lambur brought with her from itsy bitsy. The 13 x half-hour series will be produced by Ottawa, Canada-based Ocnus Productions and was created by stand-up comic Greg Lawrence – exactly the sort of cross-fertilization that appeals to Lambur.

On the other side of Lambur’s business is client representation – work that provides her with a more predictable return than the elusive talent-spotting game. In this arena, Lambur and Wilson’s breadth of experience is critical. ‘We tend to take on areas of the business in which our clients aren’t as strong or connected.’

For example, Lambur acts as TV distributor for New York-based Big Tent, a merchandising, licensing and publishing operation set up by former Golden Books colleagues Stephen Weitzen and Rich Collins. Big Tent is the North American agent for Miffy and has assigned Lambur to assist with U.S. TV distribution for new 3-D stop-frame series Miffy and Friends (65 x five minutes), as well as licensing & merchandising for the property in Canada. Likewise, Lambur offers TV/video distribution and licensing & merchandising consulting to Ottawa, Canada-based Dynamite Cartoons (producer of Untalkative Bunny) for some of its developing properties, the details of which were still under wraps at press time.

Lambur plans to take on another two or three clients, at which point there may be ‘opportunities for them to collaborate. By encouraging this, we can act like a virtual corporation – keeping down costs and recruiting talent on specific projects.’

Like Lambur, former Saban VP of international co-productions & acquisitions and co-founder of new indie outfit Pastis Television International Sam Ewing says the biggest downside to an indie operation is the lack of a support network. But the upside, says Ewing, is that ‘I like the worry. It’s scary going it alone, but that motivates me to be creative.’

Pastis marked its arrival at MIPTV 2002 with the launch of Magi-Nation – a CGI concept based on a card game franchise from Interactive Imagination Corporation. The aim is to produce a 26 x half-hour series budgeted at between US$300,000 and US$400,000 per episode for delivery in fall 2003. Entrusted with adapting Magi-Nation for TV is L.A.-based prodco Keller Productions, headed by former Fox Family Channel executive VP Eytan Keller.

Ewing has funds to option established ideas, but Pastis properties won’t all be snatched from the overheated book market. Since forming Pastis, Ewing has been ‘trawling toy stores looking for characters that possess humor and high adventure,’ and Magi-Nation marks the first time he has backed a card-based franchise.

Ewing says the market is tough at present, but while he has yet to confirm deals for Magi-Nation, he is not unduly worried by the scarcity of funds. ‘I’ve been in this business for 30 years, and the one thing I know is that broadcasters need new programming every year. The money is always there for the right project.’

The North American experience is echoed in Europe, where there has also been a rash of start-ups by high-profile kids execs like Alastair Swinnerton, the Skryptonite co-founder who recently formed animation studio BA20. Swinnerton was co-creator of the concept behind the Lego Bionicle property, so it’s not surprising that his first project at BA20 is a boys adventure touted as Bionicle meets Star Wars. Terranoids – an action-adventure series targeting boys ages eight and up – is set on a planet where robots have rebelled and enslaved all humans, with the exception of three teens. Interestingly, Swinnerton plans to produce Terranoids as a video game and feature flick first before moving on to a TV series, since films are currently easier to finance in the U.K. than television. Echoing Lambur, Swinnerton says he plans to bring his portfolio to life by forming alliances with like-minded producers, distributors and broadcasters.

This collaborative theme is further exemplified by Cake Entertainment and Canning Factory’s partnership on Ebb & Flo (26 x five minutes) and Ophelia (26 x 10 minutes). Budgeted at US$1.5 million and based on the book series by author/illustrator Jane Simmons, preschool project Ebb & Flo will be produced in a hand-rendered animation style. Cake and Canning Factory are on track to deliver the series in April 2004. Slated for delivery to CBBC in December 2003, Ophelia follows the adventures of a young sheep who lives on a farm in the Scottish Highlands and carries a series price tag of US$2.8 million.

In this case, the partnership involves the fusion of established distribution and production talent. Distibution veteran Genevieve Dexter, who has enjoyed stints at Link Entertainment, Eva Entertainment and RTV, heads up Cake, while Canning Factory is the brainchild of award-winning animator Kate Canning (James the Cat). The two see an increasing need among U.K. producers to become more creative in securing project financing. As Canning noted at an animation forum organized by U.K. indie producer trade body PACT last fall: ‘Many producers would like to hold on to distribution rights and higher equity but don’t have enough time to devote to the international marketplace to identify the key buyers and investors.’

Another veteran U.K. talent to have launched into the indie market is Dan Maddicott, one of the most respected producers of kids content within the ITV network until his fiefdom was shuffled out of existence by Granada’s takeover of United Film & Television.

Now creative director for Anglo-Canadian prodco Indie Kids, Maddicott says the transition to independent producer status was made easier by teaming up with partners used to the vagaries of indie life. ‘I set up Indie Kids with Michael Haggiag (Global Arts Productions London) and Arnie Gelbert (Galafilm Productions Montreal). We’d all worked together to produce 53 episodes of The Worst Witch – a drama that was a success in the U.K. and Canada.’

Indie Kids’ three founders have experience across TV, film and publishing (Haggiag used to run a publishing house, and his wife wrote Angelina Ballerina) and have many door-opening industry contacts between them. To wit: During his first tenure at ITV, former BBC controller Nigel Pickard oversaw Maddicott output such as The Worst Witch and Little Grey Rabbit. Prior to departing BBC to return to ITV, Pickard commissioned Indie Kids to produce a live-action BBC special based on the Raymond Briggs book Fungus the Bogeyman. The show is expected to debut in a Sunday afternoon slot next fall on BBC and has also been picked up by Canada’s pubcaster the CBC.

Aside from Fungus, Indie Kids has three concepts in very early development: a remake of a direct-to-video live-action Nursery Rhymes project that Maddicott first produced in the 1980s; a Flash-animated, 52 x 10-minute version of cult website Harold’s Planet (www.haroldsplanet.com); and a 2-D version of The Large Family, based on a popular book series by British kids author Jill Murphy (Worst Witch) following the exploits of an elephant family.

Maddicott’s diversified portfolio reflects the strengths of the partners he is now working with – and the need to present the market with a range of options. It’s a model that underlines how the new indies are trying to balance their established expertise with experimentation. Experience says you persevere with what you know. Necessity says you diversify your portfolio to increase your chances of getting a hit and then find like-minded collaborators to share the risk.

The only independent studio that has eschewed this approach is London-based Spellbound Entertainment, where former HIT head of creative development Peter Curtis and ex-Endemol head of advertiser-funded programming Nick Barrington are putting every ounce of their collective energy into stop-frame preschool series The Koala Brothers (52 x 10 minutes). Curtis saw the concept (devised and produced by Famous Flying Films) at Cartoon Forum three years ago and optioned it after forming Spellbound in April 2001. Budgeted at US$3 million, The Koala Brothers centers on siblings Frank and Buster, who leave their home in the Aussie bush and go to the Outback to help creatures in need. The BBC greenlit the show in mid-2002, but Spellbound’s biggest coup is that it has retained international broadcast, merchandise and publishing rights to the project, which should provide hope to other indies struggling to both finance projects and maintain creative control of them.

Soon-to-be-announced co-production partners and a master toy licensee are now in place – which means Spellbound has a potentially lucrative franchise in production until the end of 2004. This security is obviously a factor in Spellbound’s decision to focus on a single project. But as Curtis points out, ‘for independent companies, strategy is dictated to some extent by the position you find yourself in.’ Once The Koala Brothers is set firmly in motion, Spellbound will turn to its next project, and Curtis reportedly has a couple of book-based preschool ideas and live-action dramas lined up.

Kids creative John Bullivant also spent time at HIT before joining Pearson and then TV-Loonland. He left the latter following changes in strategic direction and formed Kickback Media last September. And unlike many of his peers, Bullivant has lost faith in the classic TV-driven model. ‘I’ve spent years trying to develop and finance TV properties with the potential to drive ancillary revenues. But so many people who thought they had the next big hit have failed to deliver anything more than a TV series.’

Bullivant’s response has been to position Kickback as a company that ‘creates, develops and manages character- or design-based properties. TV may play a part in the career path of such properties, but it’s not always going to be the first place I go. The reality is that TV is rarely able to put down the roots required to build a franchise.’

The most radical element of Bullivant’s plan involves drawing retailers and manufacturers into the character creation business at a much earlier stage. ‘Instead of clients and ad agencies licensing characters, I’m looking at whether they can create their own. When you see the impact achieved by Levi’s Flat Eric [a yellow puppet featured in a recent Levi’s ad campaign that’s become a cult hit among tweens and teens], you have to believe there’s potential to use retail and advertising exposure to build franchises.’

Of course, the trick lies in making the audience believe it has discovered this character itself rather than force-feeding it through a marketing campaign. ‘My approach is not about taking established characters like Kellogg’s Tony the Tiger and making him into a TV series. It’s about making marketers aware of the potential of characters they might be developing in-house. If we can then feed those characters into the public consciousness in a way that gives them credibility and legitimacy, they become powerful brand marketing tools.’

It will be interesting to see how many of the new wave of independents are still around in two years. Some may founder on the same recessionary rocks that have sunk so many indies in recent years. Others will jump at the chance to rejoin bigger outfits when the economy improves. In the meantime, it’s possible that the combination of experience and experimentation may enable at least one of these outfits to hit on the Next Big Thing.

Editor’s note: The electronic version of this article has been edited from the original print version in order to correct or clarify some information that it contained.