Drawn to new path: independent animation studio takes reverse approach to selling its shows by cornering overseas market before moving into domestic distribution. (Small Business).

MIKE and Liz Young had been small-time television producers in the U.K. struggling to grow their business far from the heart of the entertainment industry. So, like a lot of Hollywood hopefuls, the Welsh couple packed their bags and moved to Los Angeles.

"Network executives found it hard to buy something from far off. In those days they wanted you to be up the road," said Mike Young.

These days, it's working in reverse.

Armed with a roster of overseas contacts, Mike Young Productions has become an anomaly among independent producers: an animation studio that competes locally by selling internationally.

"The traditional model is you sell to a network and build enough episodes to sell overseas. Mike Young has turned that on its head," said Bill Janczewski, chief executive of Unbound Studios in Los Angeles, one of Young's competitors. "You have this American company cornering a market overseas before coming here, and it's really re-invented how you can go about pushing your content."

MYP's access, primarily to European broadcasters, is a distinguishing feature for the firm, a partnership of the Youngs and Bill Schultz, a former Film Roman executive who bought into the business in 2001. The company has grown to 90 employees and $25 million in revenues last year from just a few employees generating $1 million in revenues in 1990.

Domestically, the company has three shows on the air: "Clifford the Big Red Dog," on the Public Broadcasting Service, "He-Man and the Masters of the Universe" on AOL Time Warner's Cartoon Network and "Butt-Ugly Martians" on Viacom's Nickelodeon.

Those, and six others, now air internationally.

Mike Young is responsible for most of the overseas sales, Liz Young is in charge of pre-school productions and Schultz heads up the male-oriented action projects like "He-Man."

"In some sense I kind of think of him as a foreign competitor," said Mike Wolf, senior vice president at Film Roman Inc., the Los Angeles animation studio that produces "The Simpsons" and "King of the Hill."

Storybook beginning

As Mike Young tells it, his stepson, Richard Finn, inspired the business. Finn, now head of post-production at MYP, was having trouble falling asleep when he was a child in the 1970s. Young, at the time an advertising copywriter, told him stories about "Super Ted," a teddy bear who was also afraid of the dark but who turned into "Super Ted" when he whispered a magic word.

Finn told "Super Ted" tales to his class, and that evolved into a series of 100 "Super Ted" books Young churned out through the late '70s.

Amid that success, Young was approached by S4C, a Welsh broadcaster, to turn "Super Ted" into an animated series. He agreed - on the condition that he and Liz could produce the show.

The Youngs recruited a team of artists from local high schools and colleges. They did everything in-house, from drawing frames to painting and filming each show. "In one end went paper out the other came film," Mike Young said.

The couple ended up producing several shows but it was hard to sell their product in the United States, so they decided to move to Los Angeles in 1989. They sold the rights to "Super Ted" and other shows to finance the move.

In its first year, MYP produced "The Little Engine That Could," a short film that ran before Universal's 1991 animated feature "An American Tail: Fievel Goes West."

Even then, the couple looked overseas to get new projects up and running.

Licensed and proprietary

Now with six shows and a feature film in production, as well as four other shows in development, MYP is bursting at the seams. At the company's Woodland Hills headquarters, animators sketch away in their cubicles in one room, while in another, editors clean up animated tapes shipped in from production offices overseas.

Young said half of MYP's work is generated by licensed content, half is original to the firm. On licensed productions, the company generally takes a producer's fee of 2.5 percent of a show's overall budget, which is generally between $300,000 and $400,000 an episode for 26 episodes, Young said.

Internally generated shows are a different animal.

MYP's creative folks start with a concept, which is worked into characters and a script. Then, artists draw up a rough two-to three-minute version of the show, at a cost of between $20,000 and $100,000. If a network decides to buy it, several episodes are mapped out and sent overseas, where animators pump out the final product.

MYP develops about a half dozen shows a year, Young said, most of which never get made.

Still, locking in foreign deals allows MYP to cover most of its costs before starting production and reduces its reliance on domestic deals.

"In the current climate, network license fees don't begin to cover the cost of production," Wolf said.

All of which makes MYP something of a darling with the networks.

"They make great animation at a low cost and very quickly, which is all a network could ask," said Peilin Chou, vice president of development for cable network The New TNN, a unit of Viacom.

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Mike Young Productions

Year Founded: 1990

Core Business: Animation Studio

Revenues in 2001: $21 million

Revenues in 2002: $25 million

Employees in 2001: 45

Employees in 2002: 90

Goal: To own greater proportions of the properties the studio creates and build up a distribution library.

Driving Force: Creating animated programs that entertain, inspire and delight children of all ages.