With the Monte Carlo Television Market’s reputation as a strategic meeting point, it is perhaps surprising that it has not developed as a forum for discussing licensing and merchandising opportunities.

This may be symptomatic of the uncertain relationship between European television producers and their counterparts in licensing and merchandising. It is no secret that European properties have had greater difficulty, for a variety of reasons, transcending national boundaries, while U.S. characters smash through territorial barriers with consummate ease.

David Ferguson, director of co-productions at Nelvana Enterprises in the U.K., is not convinced, however, that Europeans ‘lag behind’ Americans in their ability to grasp the licensing and merchandising disciplines. Instead, he stresses the U.S.’s advantage in having a homogeneous primary market of 260 million. ‘Europe is different. The U.K. looks for low-end, high-volume products, while France wants low volume, high end, and Germany sits in the middle of the two.’

This diversity is part of the reason there has not been a successful major toy deal across Europe, he says. In the case of Nelvana-developed concepts, ‘we don’t bother to appoint a licensing agent unless we have a show that is a hit.’

Gary Sh’efield is new business director at CPL, a major pan-European licensing company that services U.S. giants like Marvel and Universal Television Entertainment, as well as tightly targeted domestic properties in Europe. He shares Ferguson’s view that ‘Europe is only a collective title for a group of individual countries. We have had properties that were successful in France and Spain, but we couldn’t give them away [in the U.K.].’

But this d’esn’t explain why European product rarely makes it back across the Atlantic to the U.S. International sales and marketing consultant Brian Lacey believes the situation results from different sensibilities.’ Generally speaking, in Europe, the program is the art form. In the U.S., the deal is the art form.’

Lacey recently repackaged Marina Productions’ Mr. Men for the U.S. syndication market. In the case of Mr. Men, Lacey repackaged five-minute sequences as half-hour shows. He says this was an essential step. ‘If you don’t want to package your program, that’s fine,’ says Lacey. ‘But don’t expect a deal in the U.S. You have to adapt to the needs of the market.’

Traditionally, says Lacey, European broadcasters have shown little interest in whether merchandising deals come attached to a new production, though he believes this is changing. ‘There is a new commercial spirit in Europe, because broadcasters can no longer rely on domestic television licenses. Economics are forcing them to become attuned to other opportunities.’

The gradual acceptance of the need to generate ancillary revenue is apparent in most major European territories, but the area is being approached with sensitivity. In the U.K., Carlton Licensing’s merchandising manager, Charlie Donaldson, says, ‘You’ve got to have good programs to create a market for licensed product. Our program-makers work in a pure environment, which is not to say we don’t have an early dialogue with them to maximize the commercial potential of our properties.’

Carlton scored a success this year with the preschool production Tots TV, which was sold to PBS. Licensing in the U.S. is handled by The itsy bitsy Entertainment Company. The complexity of that deal, however, is an indicator of how difficult it would be to replicate the same success throughout Europe. ‘You’ve got to tie in your activities with television deals, which is what makes it so difficult in Europe,’ says Donaldson.

Meanwhile, the merger of CLT and Bertelsmann’s UFA has created one of the largest television operations in the world, with broadcast outlets across Europe. Yet CLT-UFA head of international acquisitions and sales Heinz Thym admits that in the core German market, the merchandising business is ‘not yet very sophisticated. The U.S. has a longer tradition and better know-how.’ Thym is conscious that ‘Germany is an extremely important market for merchandising, and it makes sense for us to have a part of it. But right now the focus is on television rights.’

There are companies such as Saban Entertainment that straddle both the U.S. and European markets with great success. Since setting up in Paris in 1991, the company has taken steps to ensure it is not wholly reliant on its U.S.-originated hits, such as Mighty Morphin Power Rangers. It has built European television productions, such as Princess Sissie, into powerful off-screen properties.

Saban International president Michel Welter says, ‘Producers need this new income because television licensing fees have not changed for a long time.’ He admits, however, that getting licensing and merchandising revenue up front is very difficult. ‘Unless you have a strong established character, you need TV exposure.’

Welter shares the opinion that licensing in Europe is complicated by the fragmented nature of the market. Countries such as the U.K. are, he says, very developed. Spain, Scandinavia and Germany are not. For toy manufacturers, there is little financial appeal in developing a character that cannot cross national boundaries, says Welter.

In the case of Princess Sissie, Saban has secured television deals throughout major European markets for 52 half-hours of animation. It has an Italian toy manufacturer working on a line of products and interest from toy companies in the U.S. Other Saban projects following the European co-production route include an adaptation of Michael Ende’s Jim Button, which will be a co-production with France’s TF1 and Germany’s ARD.

Canadian companies are also actively nurturing European relationships. Alliance Communications has just launched its first traditional animation concept, Captain Star, at NATPE. This production pulls Alliance into partnership with Filmworks (U.K.); Harvest Entertainment, the rights division of the U.K. broadcaster HTV; ZDF (Germany); Canal+ (Spain); Nickelodeon UK; YLE (Finland) and VPRO (Holland).

Alliance’s head of international TV sales, Jean-Michel Ciszewski, sees this as a growth area for the company, but admits that, ‘if you want to make money in animation, you have to be in the merchandising business because TV licensing fees don’t fluctuate that much. We are now getting structured to handle these additional rights.’

CPL’s Sh’efield sees signs that ‘some companies are getting switched on to the merchandising and licensing side. We are getting more requests to get involved at an early stage.’ Recent successes for CPL have included the animated series Dennis The Menace, adapted from the popular children’s comic. A sign of the times is that Dennis has been adapted for 60 licenses.

French producer Gaumont typifies the trend towards commercialism. Vice president of international TV distribution Mickie Steinmann says, ‘Our first priority is the quality of the television production. But licensing and merchandising is a big part of the strategy even at the concept stage.’

Key Gaumont products include Sky Dancers and Dragon Flyz, and Monte Carlo will also be one of the first outings for Gaumont’s new offering The Magician.

German production house Ravensburger Film + TV is another that is active in this field and has its own merchandising department. According to head of acquisitions Rolf Ernst, ‘merchandising and licensing is always part of the individual marketing strategy for each property. However, we do not consider merchandising in the German-language territory as the major source for recouping profits.’

With the complexity of the European market, the message seems to be to approach the licensing program pragmatically. Both Ferguson and Lacey concur that a toy deal can go horribly wrong. ‘The toy relationship is stronger in the U.S.,’ says Lacey. ‘But it’s a fatal mistake to believe that if there is a toy, it will make the television show. That’s a graveyard for people who have lost a lot of money.’