Republic crayons licensing deal with Children's TV Workshop.

Independent beats out majors for home video rights

The booming children's home video market has a new player, Republic Pictures Corp. Although Republic is a small ($68 million annual revenues) independent studio, it scored a coup by beating out several major studios to obtain home video licensing rights to the Children's Television Workshop.

The eight-year distribution agreement announced last week underscores kiddy clout in the videocassette sales business. Children's videocassettes now account for about 75 percent of all the video sold in the U.S., according to industry statistics.

The video rental business is driven by hit movies and children's fare is less important there. Children's sales are growing at least 10 percent annually, driven by the majors -- especially Walt Disney Co., which alone sold 20 million cassettes of its feature film, "Beauty and the Beast."

There is a home video market for children's educational programming because commercial television provides little, in Republic's view. Children watch these cassettes repeatedly, making the $12.98-$14.98 price tag a good value for parents, according to Russell Goldsmith, chairman and chief executive of Republic, which is based near Marina del Rey.

Goldsmith declined to divulge the specifics of the deal with CTW but estimated it could produce 30 percent of Republic's video sales business in three years. In 1992, Republic generated $42 million in the home video business and it has been growing by more than 20 percent a year, Goldsmith said.

Children's Television Workshop is the New York-based, non-profit producer of hit shows such as "Sesame Street," "The Electric Company" and "Ghostwriter." These shows are mostly seen on Public Broadcasting System (non commercial TV) stations.

"Sesame Street" video rights were sold to Random House two years ago and several million cassettes have been sold, according to Republic's executives. The deal with Random House expires in 1995 and Republic can be expected to go after the rights.

Republic's acquisitions war chest was enhanced earlier this year when Blockbuster Entertainment, the nation's largest video retailer, invested $25 million in Republic.

Marjorie Kalins, group vice president of production for CTW, said a dozen studios/video distributors were considered, including several majors.

"We were very interested that Republic didn't have a children's line and this will allow them to launch with a great deal of product," she said. "They made the best marketing presentation. We needed somebody large enough to handle a line this big and someone small enough that I could get Steve (Beeks, president of Republic Home Entertainment Group) on the phone."

Republic will begin marketing five episodes of "Ghostwriter" on July 26. In addition, two specials -- "The Lion, The Witch and The Wardrobe" and "Basil Hears A Noise" -- will be released. Republic will package segments from "The Electric Company," a former hit television show that ran for 17 years but is no longer on the air. Republic executives said that show has the largest sales potential at video stores.

Other releases will include CTW's 3-2-1 Contact and Square One TV's Mathnet. "CRO," a science and technology show that debuts on ABC Television this fall, will be released in video by Republic in 1994.

Republic has been aggressively expanding its video offerings. It began in 1985 to leverage its 1,400-film library and has acquired 90 films for U.S. and Canada home video distribution since 1987. In 1991 it gained distribution rights to the Hallmark Hall of Fame library.

Since March, Republic has sold in excess of 250,000 cassettes of Hallmark's "Sarah, Plain and Tall" and 140,000 copies of "The Secret Garden," another Hallmark issue, according to Gary Jones, senior vice president of home video sales at Republic.