Licensing biz riding a wave.

With merchandising generating $15 million per hour, the outlook can only be rich.

The saying goes: "What came first, the chicken or the egg?" In the case of merchandising, the issue f what comes first, the product or the show is often pondered.

Nevertheless, there is no doubt that there is a lot of money to be made in licensing and merchandising. And, to no surprise, many program distributors are entering this lucrative and challenging aspect of the entertainment industry.

Licensing is the business of leasing the right to use a legally protected name, graphic, logo, saying or likeness in conjunction with a product, promotion, or service. It is usually accomplished by a formal agreement between the owner or agent of the mark (the licensor) and the prospective licensee who is either a manufacturer, supplier of services or an agent on behalf of them.

According to the Licensing Industry Merchandisers' Association, licensing as an industry now produces $15 million worth of retail sales every hour, 12 hours a day, 365 days a year. Latest figures indicate the licensing industry generated $98 billion worldwide at the retail level.

The huge licensing opportunities available beg the question of whether distributors think of licensing a product first and then developing a TV show based on that merchandise, or vice versa.

Joy Tashjian, a 14-year veteran of the merchandising business and president of Worldwide Merchandising for DIC Entertainment, said that a lot of times properties aren't even based on TV shows, like the Cabbage Patch dolls for instance. "Some of the properties that DIC has licensed have had product out well before a show has even been picked up. For example, the Madeline product preceded the TV series," noted Tashjian.

Currently, DIC's hot property for licensing is Sailor Moon. Pegged as a female action hero, merchandise from the show will be heavily marketed at the upcoming licensing and merchandising show in New York this month (see related article). Although product will not be available until after the launch of the show in the U.S. in September, DIC will sell a small quantity of dolls in stores beginning in mid-August. "Our traditional format is to let the show gain some popularity and let kids find the show and then follow up with product."

Rick Ungar, New World Entertainment, doesn't deny there is a lot of money to be made in licensing, and even gets defensive when one says merchandising can go overboard. "If something sells. Is that bad?" asked Ungar. "If you are entertaining a child and not harming them or sending a negative message, I don't see a problem with licensing your product in any way possible." Ungar feels there is too much emphasis on which comes first, the product or show. "It's almost a 'sinister' thing that is attached if you acknowledge that merchandising came first," commented Ungar. "It's inappropriate and people are wrong to have that misconception."

After spending so much time on boy properties (Biker Mice From Mars, Marvel Action Hour), New World is changing its tune a bit and is now concentrating on a girl property titled Tea Party Twins.

According to Elizabeth Sheppard, vp of Licensing for Nickelodeon, the cable network will air a show regardless of whether it thinks merchandising can come out of it. Nickelodeon licenses in two different ways: one way is with a branded activity line, which doesn't necessarily emanate from a show, and the other is property specific. One such branded product is "Floam" - a product that can be moulded into different shapes. Property specific product includes Nick's Ren &r Stimpy line of merchandise.

Sheppard stressed that Nickelodeon tries hard not to create "me - too" products. "We won't do a different version of something that already exists," remarked Sheppard. In addition to keeping things "fresh," Sheppard said that probably the most challenging aspect in licensing is the competitive arena in the marketplace.

It is obvious that for all of these distributors licensing and merchandising is a significant part of their respective incomes. For Canadian distributor Breakthrough Entertainment it is no different, however - a good part of their income generated from merchandising of Dudley the Dragon goes back into the public broadcasting system.

Peter Williamson, executive producer of Dudley the Dragon, commented that Breakthrough's marketing strategy for the Canadian pre-school show was to get it on public television in the United States as soon as possible. Learning from the marketing mistakes made from Barney merchandising (no money from Barney sales went back into PBS), Breakthrough set up a special fund that will be administered by the participating PBS station. The fund will take a portion of the merchandising proceeds, which will be used to develop similar, responsible children's programming for PBS.

Williamson was quick to note that Dudley was very much the reverse as far as product coming before the show. "Dudley started about 15 years ago in the Canadian school system as a character to teach kids about energy conservation," commented Williamson. "The character, idea, theme and primary intent was for public education. That it has become a commercial entity as well is secondary."

Currently, there are 50 U.S. corporations that manufacture Dudley product, ranging from talking books to stuffed animals. Products will be launched for back to school in the third quarter of this year.