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Big Media Companies Search for Synergies

The word "synergy" fell into disrepute with big Hollywood media conglomerates, because grandiose cross selling ambitions fizzled. Yet little noticed, a synergy trend between film studios and their separate consumer products division siblings is a growing success story of collaboration.

The prime example is Walt Disney hitting the jackpot with the Princess Disney product line � a creation of its consumer product division using characters adapted from the studio division. After shipping the first products in 2001, Princess Disney is forecast to generate $3.4 billion this fiscal year in store-level revenue. That's for clothing, tiaras, bedding fabrics and the like. The company doesn't say what its take is from retail revenue, but it's likely well above the 5.6 percent industrywide average.

"Disney Consumer Products is now able to independently create new intellectual property, in addition to those created by Disney Studios and The Disney Channel," noted DCP chairman Andy Mooney, speaking at the giant Licensing International Show in New York City. The company is now rolling out Disney Fairies, another consumer products franchise � this one built around the Tinker Bell character.

Other attractions of newly-minted licensing properties are keeping character properties active at stores consistently, which is difficult with product linked to transitory films and TV shows. Also, merchandise can be tailored to fill gaps in a product line that movies and TV shows miss, notes Kagan Research.

An example of targeting an unexpected consumer segment comes in the Warner Bros. Consumer Products introduction of a fashion property based on Tweety Bird from its Looney Tunes. "Tweety Designed by Nicky Hilton" is a high-end clothing and accessories line scheduled for Spring 2007 debut. Women and older girls are the target of designer merchandise based on a property usually associated with the kids market.

Consumers in the U.S. spent $107 billion on licensed merchandise in 2005, generating $5.95 billion in royalties for intellectual property owners, according to the Licensing Show organizer International Licensing Industry Merchandisers' Assn. (LIMA). The royalty revenue is up 1.8 percent from 2004. The characters segment of royalty revenue � which encompasses movies, TV shows and other entertainment vehicles � rose a healthy 2.4 percent to $2.63 billion in 2005.

In the coming months, I anticipate that big media will further leverage their licensed merchandise brands with cross-channel interactive promotional campaigns targeted to consumers at home (online via the web), and while on the go (via various mobile devices) that complements in-store retail point-of-sale campaigns.

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