A Firm From the Great White North Takes Off

Nelvana Ltd.--a little production company pitted against the likes of Disney, Time Warner, News Corp. and Viacom--no doubt feels that Oscar-nominated song from “South Park: Bigger, Longer and Uncut” possesses a grain of truth: “Blame Canada.”

Perhaps that’s because Nelvana has at times found itself at the center of controversy due to its nationality, which provides the Toronto-based producer of such popular animated series as “Franklin,” “Little Bear” and “Babar” a significant leg up in the ongoing battle to place children’s programs on U.S. television.

Two years ago, CBS turned to Nelvana to supply its entire Saturday morning lineup largely because the company--relying on Canadian and European government subsidies--was able to do so for a bargain price of $50,000 per episode, less than a quarter of what networks normally pay for animation. Critics were quick to say that Federal Communications Commission guidelines designed to promote educational children’s fare thus had the unintended effect of prompting CBS to ship its kids shows north of the border.

More recently, cartoonists picketed outside local public TV station KCET, angry that the Public Broadcasting Service had ordered a half-dozen educational series from Nelvana--using taxpayer money, they argued, to buy programming that put American animators out of work.

Aided in part by government subsidies and a favorable Canadian dollar exchange rate, Nelvana has managed to thrive while many mid-sized U.S. companies have gone out of business; indeed, opportunities for independent suppliers have diminished as deep-pocketed conglomerates such as Disney use the networks they own to showcase and merchandise their own children’s properties.

Despite that dynamic, the next few months will see an insurgence of new Nelvana-produced programs, including “Maggie and the Ferocious Beast,” a preschool series that premiered this month on Nickelodeon’s morning block Nick Jr.; “Cardcaptors,” the latest variation on “Pokemon’s” brand of Japanese anime, which makes its debut Saturday on the WB network; and the first of a half-dozen educational shows Nelvana will produce for PBS, beginning in September.

In addition, Nelvana (named after a Canadian comic-book character, the Eskimo goddess Nelvana of the Northern Lights) will even continue its presence on CBS with “Franklin” and “Little Bear” included in an animated Saturday morning block supplied by sister Viacom network Nickelodeon.

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All told, Nelvana will be responsible for 20 series on U.S. television next season--a testimonial less to financial issues, maintains Nelvana Communications President Toper Taylor, than a well-articulated strategy.

“We saw educational [series] as a real opportunity for building a dominant position in a programming niche,” he said, citing the appetite for such fare to fulfill the FCC’s requirements.

A native Californian who graduated from USC and joined Nelvana more than a decade ago, Taylor nevertheless acknowledges the handicap smaller U.S. producers face. In fact, he advocates domestic subsidies as well as legislation mandating that a percentage of network programs be allocated to independent companies. Federal rules that limited the networks in producing their own shows were eliminated in 1995.

Networks usually pay lower fees to independent suppliers, which means a company such as Nelvana has to settle for less in the U.S. and garner its profits abroad.

“The only way those deals economically work is to create subsidized entertainment, be it German, Italian, French or Canadian,” Taylor said. “It’s why the American independent is currently having such a difficult time.”

In the case of “Cardcaptors,” Nelvana has spent roughly $100,000 on each episode to incorporate new music, scripts and vocal tracks, revising a show that has already enjoyed success on the NHK network in Japan.

“There are absolutely benefits to what they can financially make work,” noted Donna Friedman, senior vice president of programming at Kids’ WB, who hopes the series will attract more young girls to a network that skews toward boys with such shows as “Pokemon” and “Batman Beyond.” (The WB is part-owned by the Tribune Co., owner of the Los Angeles Times.)

That said, Nelvana insists networks won’t buy a project without some belief it can attract an audience, and that its ability to sell shows has been misrepresented, including the arrangement with PBS. The network has stated the commitment represents a small fraction of PBS’ children’s programming and that its priority is finding shows that will appeal to kids.

“Nobody understands the issue,” Taylor said. “PBS is not giving us a penny. The $40 million in production is being financed entirely by Nelvana. . . . For some reason, people think, ‘Our tax dollars are going into Canadian animation,’ and they’re not.”

Yet such pronouncements have done little to mollify U.S. animators who are especially chagrined to see PBS’ resources--either through donations or outright funding--used to support productions made outside the U.S.

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With little chance of tax breaks or subsidies that would afford them parity with Canada or Europe, the animators’ union continues to lobby for congressional relief at least in relation to public television.

“We’ve got people who can compete with Canada on a level playing field,” said Steve R. Hulett, business representative for 2,400 animation writers, artists and technicians of Local 839 of the International Alliance of Theatrical Stage Employees. “It’s like everything else: They say, ‘We’re more creative.’ No, you’re not, because if you were charging as much as these U.S. companies, you wouldn’t be getting all this work.”

According to Taylor, however, Nelvana has capitalized on its acquisition of popular books and franchises to turn into children’s programs, such as a recent pact for rights to develop a series based on Dr. Dolittle. Such deals, he said, have enabled the company to keep selling programs to Nickelodeon, the Disney Channel, the WB and Fox--remaining one of the few independent programming sources to companies that increasingly look inward for their shows and often approach alliances with each other warily.

The challenge, Taylor said, is maneuvering between these industry behemoths without getting squashed.

“Ironically, this consolidation has created a renaissance for Nelvana,” Taylor said. “[But] we have to be a PT boat to their aircraft carriers, and we have to be nimble to survive.”

* “Cardcaptors” premieres Saturday at 8:30 a.m. on the WB. The network has rated the first episode TV-Y7 (suitable for kids age 7 and older).