It’s a heck of an interesting time to be in the kids TV business. The industry has never been more innovative. With more production houses seeking a piece of the kids pie, the creativity bar has been raised to new and exciting heights.

It’s also a heck of a turbulent time to be in the kids TV business. The vertical integration of the broadcast community and the fragmentation of the marketplace have dramatically reshaped the playing field, making it much more difficult for independent producers to carve out a niche in the rapidly shrinking first-run syndication market.

Amidst these changes, the creative community faces the challenge of keeping the attention of their target audience, who seem to be turning away from traditional Saturday morning fare towards other entertainment options in increasing numbers.

‘We’re in a war for eyeballs, and that war is intensifying,’ says Robby London, senior vice president, creative affairs, DIC Entertainment. However, as the enormous success of a show such as Goosebumps proves, a well-executed, energetic and hip program will bring kids back. The big question is, what’s the next Goosebumps?

The changing marketplace

Vertical integration has reduced the number of content providers in the Saturday morning marketplace. Disney has bought ABC. Fox has partnered with Saban. Hanna-Barbera has folded into Warner Bros. as part of the Time Warner-Turner merger. And WB and UPN have formed their own kids networks.

The real estate is shrinking, and the number of available programming slots in first-run syndication is diminishing. That means independent production houses not aligned with networks are sailing through choppy seas.

‘The opportunities for independent production companies that do not have their own distribution are very few and far between,’ says Sander Schwartz, senior vice president, children’s programming, Columbia TriStar Television. ‘If the present trend continues, a handful of companies will control all of the available slots. That narrows the marketplace, creating less variety and fewer choices.’

C.J. Kettler, president of Sunbow Entertainment, agrees. ‘We’re finding out that there aren’t enough outlets to take on all the good product that’s available.’

With less real estate, much of the clutter of kids TV will eventually fall by the wayside. Good shows will flourish, but marginally performing shows may be forced off the air. ‘You must manage and market a product smartly,’ says Bob Friedman, president, New Line Television. ‘The survivors tend to be those kinds of properties that can be developed, managed and exploited in a variety of media.’

New Line’s The Mask is an example of a show with a presold marquee value that stands a better opportunity to make it in a tighter marketplace. Since networks don’t heavily promote their children’s programming in other day parts, name recognition and reputation go a long way in getting new properties launched.

‘We are not investing in television without knowing that there is an audience of kids who love this thing,’ says Deborah Forte, division head, Scholastic Productions, of shows based on best-selling book series, such as Goosebumps. ‘It’s important to reach kids through other media and use television as the centerpiece for what you are doing.’

Universal Television Entertainment (UTE) president Barbara Fisher concurs. ‘It’s a marketplace that’s friendly to franchised, presold properties.’ Universal, for instance, can promote its properties through its other ancillary businesses, such as theme parks.

Bohbot Entertainment & Media is countering the shrinking marketplace by trying to claim the last vestiges of available syndication time as its own. It plans to run 12 hours of children’s programming, Sunday to Friday, beginning in the fall of 1997, under the title The Bohbot Kids Network. ‘You’ll see the large companies continue to get larger and the smaller companies getting squeezed,’ says John Hess, senior vice president, domestic distribution, Bohbot. ‘As the little guys get squeezed out, that will provide room for companies like ours to supply syndicated fare.’

The tighter U.S. market has caused many production houses to focus attention on the burgeoning international children’s arena. For example, Cinar’s president Ron Weinberg says that his company’s niche is determining needs in multiple markets. Nelvana’s Michael Hirsh adds that if his company wasn’t globally focused, it would have serious problems. And Sunbow Entertainment has strategically shifted to producing shows for the international market first, then selling to the U.S. market.

The business considerations of the industry over the past year have sapped energy and attention from the creative community. ‘One of the things I’m looking forward to is a kind of settling of the dust,’ says DIC’s London. ‘Those who have been displaced have been displaced and those [of us] who remain can focus our energies on the business of producing cartoons.’

The ratings game: Blame it on Nielsen

There’s a dispersion, but not an erosion, in the kids audience, and clearly a shift in viewing patterns. Most industry people aren’t surprised that ratings have fallen, but are somewhat mystified at the sharp drop-offs the industry experienced last fall. They point to three possible reasons: Nielsen, Nickelodeon and the fragmenting marketplace.

It’s no secret that everyone involved in the kids TV business has always been somewhat skeptical of the way Nielsen measures the kids market. While laying the blame on Nielsen may be the easy way out, the FCC has given the gripe some credence by announcing it is going to look into the issue.

‘Between the advertising community, the distribution community, the production community and the stations . . . I think we all realize that the kids are there, but Nielsen under-reports kids’ numbers,’ claims Bohbot’s Hess. Many syndicators feel that Nielsen d’es not take into account usage of secondary TV sets in households, the sets many kids use to watch TV. ‘The numbers are off to such a point that it makes you wonder how valid they can be at the end of the day,’ says John Gentile, president, Abrams/Gentile Entertainment (AGE).

But what if the numbers are accurate? Clearly kids aren’t turning Saturday morning TV completely off, they are just moving away from the networks to alternative outlets, especially Nickelodeon. Nick has so successfully branded itself as the place for kids to turn that children naturally go there, just as news hounds flock to CNN. Nick’s Saturday numbers are up, even though it programs reruns in the day part. Nick has the added advantage of being able to promote children’s programming all hours of the day, something no other network (except Cartoon Network) can do. ‘In viewing habits, you see kids leave the channel on Nickelodeon, and that’s primarily at the expense of the networks,’ says Columbia TriStar’s Schwartz.

UTE’s Fisher believes that kids are more cable-savvy than older viewing audiences, who tend to turn to networks first, then to cable. ‘No matter what channel a network is on, it d’esn’t seem to get in their way. They find it,’ she says.

To combat falling ratings, production houses like Saban are rolling out heavy hitters like X-Men and Marvel Superher’es for the syndication market. ‘The responsibility of keeping kids tuned to domestic channels has fallen on the syndicator and supplier of property,’ says Peter Schmid, executive vice president, domestic distribution, Saban Entertainment. Schmid likens the market to guerrilla warfare. ‘We’re throwing all the firepower we have to keep kids from tuning out of the commercial stations and to Nickelodeon. We want to give the stations a positive feeling that they are doing the right thing by staying in the kids business.’

Similarly, the fragmenting marketplace creates a natural decline in network shares in the children’s market. Nickelodeon and Cartoon Network aside, kids programming can be found on many different outlets, including USA Network, The Family Channel, TNT and TBS.

Today’s kids have so many more entertainment options besides TV than did previous generations. From home video to the Internet, computer games or soccer practice, the competition for kids’ attention is more heated than ever.

‘The only way we can combat that is by being as creative as we can,’ says Kevin Gillis, executive vice president and executive producer, Catalyst Entertainment. ‘We need to push the envelope to grab their imagination, and make them feel as much a part of the entertainment world as they want to be.’

What’s working

Successful shows become lifestyle statements to kids. Kids will always find what’s hip and cool, and right now, they are seeking edgy shows with a comic twist. That’s one of the reasons Goosebumps has been the highest-rated show of the year.

It’s not hard to explain the Goosebumps phenomenon. It came with a presold audience-millions of kids read the R.L. Stine books as soon as the ink dries on the page. However, Goosebumps could not just rest on its literary laurels to be successful. The show also had to be well produced and fun to watch. Goosebumps proves that if you can find the right creative formula and capture the imagination of kids, you can bring them back to the set.

Goosebumps has already inspired some clone series, such as Bone Chillers. ‘More than being copycats, people are going to be looking at other successful book series to see if they can capitalize on them,’ says Sharon Hall, vice president, syndication, specials and children’s programming, MTM.

That’s exactly what 4 Kids Entertainment is trying to do with its British import, Mr. Men, based on a well-established book series published in the U.K. ‘Broadcasters are looking for something that helps validate their programming decision,’ says Brian Lacey, consultant for 4 Kids Entertainment.

Some of the appealing elements of Goosebumps that set it apart are that it is a live-action series and, according to Scholastic’s Forte, it gives kids characters they can relate to.

While these may be factors in its success, most of the executives surveyed believe that live action will complement, but not overtake, animation. The area where live action may come into greater play is in FCC-friendly edutainment series. Live action tends to work better than animation as an educational tool. However, when you add Goosebumps’ success to that of Power Rangers, these shows are making many studios that haven’t paid much attention to live action think seriously about it.

The players

‘Everyone seems to be interested in producing children’s programming, regardless of whether they have any expertise and background,’ says Cinar president Ron Weinberg. He is skeptical about the motives of some of the companies becoming involved. More and more, companies that traditionally have not been in the children’s business have been casting an eye in that direction.

‘What I think you’re going to see are some projects and products from prime-time players or people with marquee in another day part, because a lot of these people have children now and have grown very frustrated with the toy-driven nature of Saturday morning,’ says MTM’s Hall.

One of the more unlikely sources of this type of development is the World Wrestling Federation. The WWF has been building its brand by aggressively promoting two programs, Live Wire and WWF Superstars, to children. ‘A unique factor that the WWF enjoys is a hybrid between animation and reality,’ says Vince McMahon, chairman, Titan Sports. ‘However, unlike animation, we have the ability to do live WWF events in which kids see their her’es come to life.’

UTE’s president Barbara Fisher thinks that networks must brand themselves in order to compete. She believes that already you can look at certain programs and determine by their style and content if they run on Fox, WB or elsewhere.

The Internet and beyond

What the Internet is and what it may become are two different animals. Right now, the Internet is another medium competing for kids’ attention. Someday, it may become direct competition with networks. Rather than giving up that audience, production houses are trying to use the Internet as a way to connect kids with their favorite programs. For example, the WWF’s Saturday morning series Live Wire accepts e-mail during the airing of the program. AGE has set up a Web site that encourages kids to comment on stories and characters, and MTM’s Hall says that MTM uses its Web site to test story lines for its Bailey Kipper’s P.O.V. series. ‘It’s a way to extend the franchise and try stuff out before you commit the very expensive television production dollars to it.’

Most studios don’t see any immediate threat from the Internet in the short term. When technology improves, and money can be made from programming on the Internet, that stance may change. But New Line’s Friedman cautions, ‘We should be thinking about the on-line and Internet world behaviorally as we did about cable 10 years ago.’ And according to Saban’s Schmid, ‘We’re circling the wagons. We’re trying to get all of the various media surrounded with our product.’

Concerns about the industry

No matter how many focus groups are surveyed or alliances are formed, independent producers, studios and networks that create children’s programming are at the mercy of their fickle audience. Kids may latch onto the strangest or simplest idea and suddenly cause everyone to scramble, shake their heads and rethink their entire programming strategy. It’s the constant challenge of programming to kids.

That’s the fun part. Executives of studios and independent production houses that sell programs for the broadcast, cable and syndicated markets have other major concerns. Here are some of the things that are on their minds:

-‘Will the FCC requirement be looked at as a challenge to raise the level of programming? I’d love to see people step up to the plate in a very creative way.’ Sharon Hall, vice president, syndication, specials and children’s programming, MTM

-‘Because of channel surfing, there is a different way of providing programming now. The new way kids watch television is something we have to take into account when developing new story lines.’ John Gentile, president, Abrams/Gentile Entertainment

-‘The talent pool. With so many players and so much volume, talent has become a really important factor. We’ve been fortunate to attract good talent, but it’s always a hard battle to compete against bigger pocket players.’ Ralph Sanchez, vice president, creative affairs, Film Roman

-‘Every single year, I wonder how [the industry] can possibly get more competitive, but it d’es. I find the dearth of real estate and the smaller number of entities controlling the outlets both challenging . . . and potentially disturbing.’ Robby London, senior vice president, creative affairs, DIC Entertainment

-‘The biggest concern has to do with the idea of who is in the business. Different people are in the kids business for different reasons. There should be some good intent in making kids programming.’ Ron Weinberg, president, Cinar

-‘Despite all of the consolidation happening now, no one, not even studios, has a lock on creativity. Good ideas are not necessarily going to come from inside a large structure. The independent market has always proven to be the market where the freshest ideas come from. For that reason, I think that the creative talent is probably outside that consolidation.’ C.J. Kettler, president, Sunbow Entertainment

-‘I’m not opposed to taking pause and examining our shows for [educational] content, but I remember a time when children’s literature was trying to be politically correct, and a lot of bad books came out of that. I get concerned that a good story and a good idea could get lost in the shuffle.’ Barbara Fisher, president, Universal Television Entertainment

-‘I worry that the reaction to the FCC in the States is going to be knee-jerk, and studios are going to overreact to the point where the shows are educational but not entertaining.’ Kevin Gillis, executive vice president and executive producer, Catalyst Entertainment

-‘The biggest challenge for production companies not owned by a network, or who don’t have a strategic alliance with one to distribute their shows, is just to get a show on the air.’ Sander Schwartz, senior vice president, children’s programming, Columbia TriStar Television

-‘There’s a big place for educational programming, but we shouldn’t lump them all into one pot. I believe that you can make fun programming that’s good for kids.’ Bob Friedman, president, New Line Television

-‘I hope [the industry] will be healthy enough to be well funded so that we can still have quality programming for kids.’ Deborah Forte, division head, Scholastic Productions