Graz Entertainment - color it successful.

Stephanie Graziano shrugs her shoulders as she walks through the crowded 10,000-square-foot office that houses her Graz Entertainment Inc., freely admitting that she underestimated how quickly her animation company would grow.

"When we moved in, we thought that this room would be for storage," she says of a space now brimming with cubicles, computers and graphic artists. "That lasted about three weeks."

The growth in Glendale-based Graz's office space needs is directly proportional to its growing number of projects in development.

For the 1995 television season, Graz produced the animated kids hits "The Tick" and "X-Men" for the Fox Network, and "Skeleton Warriors" for CBS.

The CBS show has since been canceled, but in the meantime Graz has gone into pre-production on "Street Fighter" for the USA Network, added "Cyberforce" to its Fox lineup, and is doing "Darkstalkers" and "GI Joe" for the first-run syndication marketplace.

In addition, Graz is producing a half-hour direct-to-video special based on Little Orphan Annie.

"We're really known for action-adventure shows," Graziano says, "but we've done a lot of other things like 'My Little Pony' and 'Cathy' too."

Graziano started the company with her husband, Jim Graziano, in 1992 to exploit what she saw as a growing trend.

"The trend in producing was toward ownership," Graziano says. "Animation studios wanted to produce as well as own (all rights to the property), so we thought there was a niche out there for a work-for-hire company.

"We know we can't compete with the likes of Hanna-Barbera and Disney, so we choose other avenues of competition."

Finding a gold mine

Those other avenues have since led to a gold mine. In its first year, Graz handled pre-production responsibilities designing the look, developing the color palate, scripting and casting voices - for three animated shows. It has since added post-production - sound editing and additional special effects - to its capabilities.

Actual production of the shows, which entails creating the hundreds of individual cels (frames) and overlaying them on the various backgrounds, is farmed out to several studios in Japan and Korea.

Between its 1992 debut and last year, Graz grew from $3 million annual revenues to $8 million, and it shows no sign of letting up, exploring the world of ownership and licensing as well as production.

Graz's first co-ownership venture is with Top Cow Productions, a division of Santa Monica-based Image Comics, on the development of "Cyberforce." Graz and Top Cow both own the animated show, and both will take a cut from any licensing agreements to come out of it.

The firm is also looking for other properties - most likely from comic books - that it would like to develop for television, and is also looking to develop some shows in-house.

An artist's heart

Still, development is a risky venture akin to speculative real estate - and Graziano is proceeding cautiously.

"We don't have a parent company behind us to say, 'Here's $100,000 for development,'" she says.

Graziano got her first animation job at Hanna-Barbera Productions Inc. in 1972, less than a month after she graduated high school. She subsequently worked at Wait Disney Co., and was director of animation programming and production with the Fox Children's Network when it launched in 1990.

Graz was rounded in 1992 when Graziano and her husband decided to set out on their own. Her husband left Graz shortly after its rounding when he was offered the more-attractive position of vice president of production with Universal Cartoon Studios, and Graziano now runs Graz by herself.

"We're really executive light," she says. "It's me, accounting, and the rest of the company is the artists."

Graz carries a full-time contingent of about 40 employees, backed up by anywhere between 30 and 60 freelance artists a week.

"As an artist myself, I understand what drives them and what kind of needs they have," Graziano says. "On the other hand, being the sole owner of the company is like having your own checkbook and telling your kids what they can and can't have at the store."

So, what makes a successful animated children's show?

It's in the tale

"Ultimately, kids look for a good story," she says. "They want characters that they can root for and believe in.

"Secondly, they want compelling visuals. Something we strive for is to not have a single look that says the show comes from Graz. Everything we do for a client we want to have a specific look for that client - not for us."

It's a look that has earned Graz a reputation nonetheless.

"After our first meeting with Stephanie, we knew that Graz was the company we wanted to partner up with on 'Cyberforce,'" says Brad Foxhoven, vice president, business affairs at Top Cow Productions. "Like us, Graz wanted to take the animation process up to the next level. Only with Graz could we do that."

Graziano brings one more special perspective to the world of children's animation - that of a parent of two young boys.

Ultimately, she says, the trick is to see things through a child's eye, but with an adult's sensibility.

"After all," she notes, "we are making these shows for kids, but we're selling them to adults."

RELATED ARTICLE: Spotlight

Graz Entertainment Inc.

Business: Producer of child-oriented animated television programming

Headquarters: Glendale

Year founded: 1992

No. of employees then: 10

No. of employees now: 42 in-house, 30 to 60 freelance

1992 revenues: $3 million

1994 revenues: $8 million

Officers: Stephanie Graziano, president; Tom Yuen, secretary/treasurer, Kelly Amelsberg, administrative director; Will Meugnoit, executive producer, Michael Hack, executive producer