CAN BABE BRING HOME THE BACON?; UNIVERSAL GOES WHOLE HOG IN NEW MERCHANDISE DRIVE.

Byline: Dave McNary Daily News Staff Writer

Universal Studios is counting on a talking pig to take on Mickey Mouse and Bugs Bunny.

The studio has stood on the sidelines for the past decade as Walt Disney Co. and Warner Bros. reaped huge profits with their chains of stores. Now, Universal has anointed Babe, the talking, sheep-herding pig, as its icon for a major plunge into the cutthroat world of retailing.

``Babe is not just a movie for us,'' said James Klein, head of Universal's consumer products arm, in a recent interview. ``He's a long-term brand franchise for the next three to five years.''

``We see Babe as an evergreen,'' added Nancyjane Goldston, senior vice president of marketing and merchandising.

More than four dozen Universal staffers are at Toy Fair in New York this week to showcase Babe merchandise as part of the November launch of ``Babe: Pig in the City,'' the sequel to its 1995 hit movie. They're not planning to duplicate Disney's massive empire of more than 650 stores or even Warner's 183, but they are aiming to get Babe items into every major national retail chain by this fall.

All this has been in the works for more than a year, including working with the filmmakers and sessions in which Babe's key values were determined to be innocence, kindliness and adventure. Then the division had to figure out how to translate those ideas into actual products.

Universal executives believe their timing is right, contending that Babe retains a great deal of good will among customers since its campaign to hype the original movie was decidedly low-key.

``Traditionally, studios will overhype a character, but we think Babe is operating on its own momentum,'' said Klein, who joined Universal in 1996 after five years as chief executive officer of Woodland Hills-based toy specialist Applause. ``We think Babe's charm is his charm.''

Additionally, no movie character has connected in a major way with the public recently. The timing is right since few movie merchandising campaigns clicked with moviegoers last year, he noted.

``We think that he's a fresh alternative opportunity in the marketplace,'' Klein said.

The original ``Babe,'' set on an Australian farm with talking dogs, sheep, mice and ducks, took in more than $250 million worldwide and received seven Academy Award nominations, including one for best picture.

`` `Babe' had a really big following, and people who saw the movie wanted to see more of it, so the studio sort of missed the boat on merchandising,'' said Robert Bucksbaum, head of industry tracker Reel Source. He said ``Babe: Pig in the City'' has strong potential even though the climate for sequels - outside of ``Scream 2'' and ``The Lost World: Jurassic Park'' - was chilly last year.

The push for ``Babe: Pig in the City'' comes at a time when rivals are also gearing up extensive merchandising campaigns, including Sony's ``Godzilla,'' New Line's ``Lost in Space,'' DreamWorks' ``Small Soldiers,'' and Disney's ``Mulan'' and ``A Bug's Life.''

Universal will be at somewhat of a disadvantage in trying to cut through the clutter of the marketplace, since it will have to do so without benefit of a fast-food partner. A pig preaching the value of vegetarianism could hardly be expected to be a pitchman for hamburgers, executives note.

Still, Universal doesn't want to miss a trick with this campaign and plans to publish ``Babe's Country-Style Vegetarian Cookbook'' through GT Publishing, a major purveyor of cookbooks. That's just one of about 40 titles that will be in stores by this time next year.

The books are a small part of the first wave of plush toys, home furnishings, stationery and apparel that will come into high-end stores this spring under the Babe, the Sheep Pig licensing program. A total of 50 manufacturers are signed up, led by Gund for plush toys.

That will be followed in the fall by the Babe and Friends line at mass merchandisers. Klein is particularly proud of Equity Toys' Real Live Babe, carrying a $40 price tag, which can be programmed to interact with children depending on the time of day - for instance, by telling stories and singing lullabies.

All of this is part of a larger long-term strategy to broaden Universal's place in the family oriented entertainment arena now dominated by Disney. Plans are in the works for a quartet of movies next year starring fairly recognizable characters: Woody Woodpecker, the Mummy, Curious George and the Incredible Hulk.

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Photo: (Color) Jim Klain, Universal Studios' consumer products division head, has plans for ``Babe.''

John McCoy/Daily News