Rainbow Fish alliance reflects quicksilver market mutation

April 1, 2000 by Jo Anne Kenny

While the life cycle of an animated series project may be filled with many permutations from concept to execution, curiously, the evolution of the co-pro partners’ businesses can sometimes keep pace in the plot twist department. Rainbow Fish, a book that begat a video that spawned a series, is such a tale. . .

Once upon a time, there was a U.S. domestic video developer and distributor, a newbie Canadian production studio and a European company better known for its licensing endeavors than co-production. Add to that mix a children’s book enjoying international success and a desire to turn that book into a TV series.

Cut to three years later: the video company is Sony Wonder, now well enmeshed in the international TV production scene, having acquired Sunbow Entertainment in the interim; the Canadian start-up is three-year-old Decode Entertainment, which has several successful series on air, as well as a recently added distribution arm; and the Euro entertainment company is Germany’s EM.TV & Merchandising, whose morphs since the outset of the deal include going public and nabbing significant acquisitions, including the Jim Henson Company.

Marcus Pfister’s American Bookseller Book of the Year Award winner Rainbow Fish, which the three partners have successfully turned into a TV series for the three to seven crowd, now airs on SAT.1 in Germany as part of EM.TV’s Junior.TV block, in the U.S. on HBO Family (twice a day, seven days a week), and in Canada on TVO. Each half-hour episode follows Rainbow and friends’ adventures in the Bay of Neptune, and everyday activities at Rainbow’s house and their ‘School of Fish’ classroom. The series, budgeted at US$300,000 per ep (comprised of two 11-minute segments), features cutting-edge animation and special effects that reproduce the effect of Rainbow’s silver shimmering scales as illustrated in the book series. This is the story of how the co-production came to be. . .

Loris Kramer, Sony Wonder’s VP of creative affairs, discovered the book on one of her regular bookstore excursions scouting for possible kids books to option. Jumping out from amidst the piles of potential TV fodder was Rainbow Fish, which had both a literal and figurative sparkle to it. Knowing next to nothing about the title at the time, it was not until contacting the publisher that Kramer was informed that the book, published in 1992, had already sold over one million copies-an important factor when considering optioning a title. The book has since sold more than three million copies in the U.S. and 10 million globally.

Although Sony Wonder secured all rights for Rainbow Fish, the company only planned to create a home video for the U.S. market. ‘When we originally found the book, our business was very different. Back then, Sony Wonder was primarily focused on the domestic video business,’ says Kramer. The all-too-common gap in time that can exist from acquisition to production meant that Sony Wonder had started to focus on international business by the time actual production on the project began, causing them to discern the property’s greater potential as a one-hour TV special for international distribution.

Sony Wonder further reexamined the game plan when trotting out the special at MIP-TV in 1997 yielded lukewarm feedback. ‘International broadcasters and video people said that they liked the special, but they wanted a 13- or 26-episode series,’ recalls Kramer.

Hence the series seed was not only planted, but had already started to grow. With the one-hour special done, Sony Wonder ostensibly already had a series pilot. Although the final series is quite different from the special (both the book and the video targeted a younger preschool audience, while the TV series is aimed at a broader three to seven demo), the video/pilot model has acquainted the company with yet another alternative series development path to consider, due to the benefits to taking a project to the pilot stage on your own.

Next up, partners. Canada is known for its animation talent, as well as lower production costs due to a favorable exchange rate and the potential tapping of provincial and federal TV production funds and/or tax credits. And a partner with a strong European market presence/broadcast relationships is also always a valuable commodity.

The actual deal-making process took between eight and 12 months. It began as a partnership between EM.TV and Sony Wonder, with Sony bringing Decode on-board, who, in turn, brought in Ottawa-based Funbag Studios to do the animation. This was the first co-pro effort for Sony Wonder; it was also one of the first projects of its kind undertaken by EM.TV. While having three companies in a similar boat in terms of charting new territory can make for some uncertain moments, it also served to create a very level playing field, in which all three partners wielded equal creative control.

The final production financing split was 40% EM.TV, 30% Sony Wonder and 30% Decode. ‘In this case,’ says Kramer, ‘each of the partners agreed to start production prior to any presales/license fees. The budget was deficited by the partners, a very unusual circumstance.’ The fact that each co-producer committed funding to the project up front so that the show was basically greenlit turned out to be a blessing since U.S. broadcaster HBO Family did not commit until quite late in the game. Decode has the Canadian rights (giving the show a Canadian copyright) and EM.TV the European rights, while Sony Wonder has the rest of the world (all rights are in place for 25 years and encompass TV, merchandising and video).

‘Decode, being the Canadian entity, produced the show,’ says Kramer, ‘but because we were all distributors, it was a real partnership.’

Rainbow Fish airs on provincial educational broadcaster TVO in Ontario, and with that Canadian commitment, Decode was potentially eligible for certain Canadian funding to kick in. The best-case maximum-funding scenario is reserved for distinctly Canadian projects-a qualification that Rainbow Fish does not meet. Incentives such as the Cable Production Fund (CPF), for example, cannot be relied on as a guaranteed source of funding. ‘Funds like the CPF have changed the goal posts every year and at every opportunity it seems-without notice and sometimes with complications,’ says Decode partner Stephen DeNure. ‘But those funds are there for, as is very apparent with the changing rules, projects with Canadian characters set in Canada and saying something to Canadians.’ Decode will, however, receive federal and provincial tax credits on Rainbow Fish production costs.

Decode was responsible for hiring the writers and animators, but Kramer says the partners were all involved in each phase of the production: ‘Decode was ultimately responsible for the production of the series, but from a strictly creative P.O.V., we all worked together to give notes, direction, etc. It’s not just about the financial aspects as far as we are concerned, it’s really about finding other companies that are going to compliment what we bring to the table.’

The partners have gone through such significant morphing since the project’s inception that what were complimentary traits three years ago may no longer be as compelling. However, even though Decode now has its own distribution arm-a growth that breeds the natural desire to retain more rights and secure more territories-DeNure does not think that the company would necessarily hold out for a larger territory if presented with this deal today: ‘This partnership was such that we were participating in revenues from those territories [for which we did not have rights], so it was never an issue that we must have international rights in order to make sense of this project.’

EM.TV has made a quantum leap in the last few years to a point where it now has 38 series in production. Rainbow Fish has benefited from both EM.TV’s resources and the TV giant’s clout in Europe. Producer Sylvia Rothblum says that EM.TV was immediately interested in the co-pro because the book, penned by a Swiss writer, was well-known in Europe and enjoyed the additional exposure of being used by kindergarten teachers in European schools. While EM did end up with the European rights on this particular deal, the co-financing deal it signed with Victory Media Management in December 1999, giving it US$250 million to invest in series over the next five years, is now a consideration in all co-pros. ‘We are now in a position to raise financing much faster-as much as 50% of each production-which means that we can keep worldwide distribution rights,’ says Rothblum. ‘Every deal is different, but our business is distribution and merchandising, so it makes sense that we try to keep as many rights as possible.’

Sony Wonder’s acquisition of Sunbow, providing the company with a bona fide international distributor, had little tangible effect on the deal other than as an additional sales tool. The show had already been presold in several territories prior to the acquisition, and it is now one of the projects that Sunbow’s team is selling in the remaining unsold territories.

While Rainbow Fish only recently bowed on U.S. airwaves (February 19), EM is already anxious to commit to a second season of Rainbow Fish on SAT.1. ‘Rather than doing several different series, we would prefer to build a franchise and go up to 104 episodes, and be able to talk about the merchandise,’ contends Rothblum. EM.TV is currently talking to Sony Wonder and Decode about season two.