Animation studio adapting by drawing on licensing.

IN an era when animation studios are looking for additional ways to make a return on their television shows, officials at Head Start Entertainment believe they have the answer--making licensing a big part of the studio.

The venture, which began last month in offices in a North Hollywood high rise, hopes to build on a series it plans to develop, dubbed "Z Force."

"This is going to be our primary focus of the company and our animation efforts," said Doug Warr, who along with fellow venture capitalist Dwayne Corbitt founded the company.

"Licensing and merchandising these days are huge and we recognize that a majority of the money from a property will come from that area," Wart said.

With a little over $1 million invested in the firm and additional capital funding expected later this year, Corbitt and Wart hope to complete production of the first two of 22 episodes of "Z Force" by late summer and issue the show on video for the home video market.

"This was a project created by Peter Keefe and he's got a great track record after doing 'Boltron,' and 'Denver the Last Dinosaur,'" Corbitt said.

Corbitt and Warr hope to market the program to parents and their children while at the same time seeking a cable network television deal and creating a demand for additional episodes of the new series.

"It's our strategy to look at different areas at the same time we're developing additional episodes," Warr said.

The Z Force focuses on several superheroes who are distinguishable because they are born on a certain year that carries a particular Zodiac theme, such as the year of the dog or the year of the cat.

Those themes are then linked to a superhero's particular powers or emotional tendencies, like the hero born in the year of the cat is stealthy and tends to be a loner, Warr said.

"It's these zodiac features that makes children have a particular affinity to these characters," he said

"Everyone is born on a particular year so they can identify with a particular superhero automatically."

Merchandising Potential

While the company hopes to have a deal soon for the Z Force, Corbitt says the company's efforts will also focus on developing the show's merchandising and licensing potential.

"It's a key part of the business and one that we hope to build as much as the actual animation," Corbitt said.

"Animation alone won't make us successful because of the market."

With fewer dollar going to independent animation companies these days, animators must cut overseas distribution deals or develop merchandising contracts in order to break even or just make a small profit, says veteran animator Phil Roman, founder of Film Roman Inc. and president of Phil Roman Entertainment.

"In today's market it's critical that you have merchandising revenue," Roman said.

"But it really depends on the characters and the properties you have that can provide you with that revenue stream."

Due to the 1995 amendment to the Federal Communications Commission's Financial Interest and Syndication Rules or "Fin-Syn," as those in the entertainment industry refer to it, independent producers of television shows, both live action and animation have seen their markets evaporate almost overnight.

Studio ownership

The 1995 amendment allows television studios and networks to own their own programming, instead of having to pay independent producers for their shows. Thus, the number of shows from independents has dropped to just a few since the networks produce and own their own shows now.

The few shows from independents that get on the air are few and far between while their price has plummeted to well below the cost of producing the shows to begin with, Roman said.

Perhaps following the lead of such studios as DIC, which has half of its revenue originating from its merchandising and licensing efforts, Head Start plans to fully develop its merchandising and licensing departments.

"When we look to develop a series, we look at the merchandising and licensing potential and if it's not there, then it's not for us," Corbitt said.

Part of the company's strategy is to develop a number of projects for possible production, as it seeks to cut a television deal for Z Force.

"You have to have things in the pipeline and continue to build the company," Warr said.