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Nick finds ratings, business success with quirky characters

| Friday, Feb. 7, 2003

NEW YORK (AP) — Nickelodeon has won the hearts of children with cartoons like "SpongeBob SquarePants," "Rugrats," and "Dora the Explorer." The cable TV network has also won the wallets of parents, turning out a series of toys and other products linked to its shows.

Now, Nickelodeon is hoping for another big merchandising hit with "The Fairly OddParents," which made its TV debut in 2001 and follows the adventures of a 10-year-old boy and his wacky fairy godparents. The company has signed deals with manufacturers to create about 100 products tied to the program.

But Nickelodeon says merchandising, while very lucrative for the company, is secondary to programming.

"We've become this really large successful business by doing the exact opposite of what most people in the business do. We don't make shows to sell toys," said Jeffrey Dunn, president of Nickelodeon Enterprises, whose parent is media conglomerate Viacom Inc., owner of MTV Networks and Paramount Pictures.

Last year, Nickelodeon had 41 of the top 50 TV programs, on both network and cable, aimed at children ages 2 to 11, according to Nielsen Media Research. "SpongeBob SquarePants," about a sponge who lives at the bottom of the Pacific Ocean, was the No. 1 show with that age group, Nielsen said.

"The Fairly OddParents" was the No. 2 rated show with kids 2 to 11.

"There is this wholesome edginess to their characters," said Randall Stone, partner at Lippincott Mercer, a brand consulting company.

Fourteen-year-old Pete Wild, of Winchester, Mass., said he and his friends like "SpongeBob" because "it is really funny."

"He goes on these stupid adventures, and it is kind of a break from thinking," he said, reporting that he has a SpongeBob pillowcase.

Adam Lippman, 31, of Stamford, Conn., is also a fan, as is 3-year old daughter Colette, who also regularly watches "Dora the Explorer." Lippman said he's bought "Dora the Explorer" backpacks and coloring books as well as SpongeBob plush toys for Colette.

"Adults can really appreciate 'SpongeBob,"' Lippman said, revealing that he can imitate most of the characters.

That kind of appeal helped Nickelodeon record $2.5 billion in retail merchandise sales last year, a big 19 percent jump from the year-ago period. According to License magazine, a trade publication, Disney generated $13 billion in retail sales of licensed goods last year, while Warner Bros. had $6 billion, both unchanged from the previous year.

Nickelodeon made its first big splash in consumer products with "Rugrats," whose merchandising sales peaked at more than $1 billion in 1999. The show, which began airing 12 years ago, is now considered one of the company's classics.

Merchandise tied to "Blue's Clues" followed a year later, also generating more than $1 billion. Last year, "Dora The Explorer," which follows the adventures of a 7-year-old Hispanic girl, had $350 million in sales, surpassing the company's goal of $250 million, according to Leigh Anne Brodsky, senior vice president of consumer products for Nickelodeon.

But "SpongeBob SquarePants," which began airing in 1999, has been the company's biggest surprise, generating revenues of $750 million last year and exceeding expectations of $500 million. The show has attracted a wide audience, although the property had a cool reception at first among merchants, who underestimated consumers' emotional connection with a sponge.

Now, there are about 100 companies that supply products under license for "SpongeBob," ranging from Bounty paper towels from Procter & Gamble to sporting goods accessories from Sport Fun. Parents can buy SpongeBob skateboards (there are eight different models featured on www.nick.com), chairs, sheets, watches and more.

The marketing of SpongeBob reflects a merchandising strategy different from the one followed by many other entertainment companies.

Nickelodeon waits at least a year or two before releasing merchandise, carefully monitoring whether the property has the emotional impact to produce a merchandising hit. "Dora the Explorer" merchandise was not released until the holiday 2001 period, about a year after the show began.

With "SpongeBob SquarePants," Nickelodeon realized there was a cultlike teen following, and teamed with teen retailer Hot Topic Inc., which released products in 2001, two years after the show made its debut.

"It is our No. 1 licensed property ever," said Cindy Levitt, vice president and general merchandise manager at Hot Topic. She noted that teens could relate to the character, who works at a fast food joint called the Krusty Krab.

Company officials are hoping for a repeat with "The Fairly OddParents." Merchandise from the show will be in stores this fall.

"We think this could be the next SpongeBob," said Jennifer Richmond, vice president of licensing for toy company Jakks-Pacific Inc.

Still, some retailers are taking a wait-and see stance. Hot Topic is carefully assessing customer response, and plans to do some testing.

"It is an unknown," said Levitt, noting that the success will ultimately depend on the consumer.

Said Sally Mueller, director of marketing planning for Target stores: "The show is very clever," but she added, "We're still in the exploratory stage."

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