Right about this time, the phone rang. It was our entertainment lawyer in LA. “HIT Entertainment is buying Lyrick,” he said. We were stunned. Dick Leach was selling the company? This was the man who had refused Michael Eisner’s offer to make Barney as big as Mickey Mouse if he would sell his company to Disney. This was the man who sat in a restaurant with Jeffrey Katzenberg after 3 days of hearing all the wonderful things Disney would do for Barney, and said, “No thank you. I’m not selling.” Dick had told me with pride how Katzenberg had then said, “We’ve just shown you how Disney could help Barney. Disney could also hurt Barney.” Whether this story was entirely accurate or not, Dick told it with a relish that showed how much he had enjoyed sticking to his convictions and refusing to “sell out.” So why was he selling now?
The answer could apparently be summed up in two words: estate planning. Now in his seventies, Dick was ready to slow down and needed to find a way to resolve ownership of Lyrick. None of his children wanted to run the company, and passing it on to them would create huge tax implications. Selling the company to a large publicly-traded company would exchange the value of Lyrick for stock which could be transferred to his kids in creative ways, avoiding significant inheritance tax. Dick had also lost millions of dollars on the Barney follow-up show “Wishbone,” an experience that had taken more than a little of the spring out of his step. He just wasn’t enjoying the business like he used to. Regardless of the reason, we were about to be in business with a whole new set of people.
I was very familiar with HIT Entertainment, and the news wasn’t very encouraging. A large, publicly-traded British media company, HIT was the owner of “Bob the Builder” and was actively and aggressively trying to corner the world market on pre-school properties. Being London-based, I knew their knowledge of and interest in the American Christian market would be weak, at best. One of their top executives had recently told Variety Magazine that HIT was no longer interested in working with properties they didn’t own. From now on, they would be buying, building and managing their own properties around the world. (Shortly after buying Lyrick to get Barney the Dinosaur, HIT bought the company behind Thomas the Tank Engine.) In other words, unless they could own a property, they weren’t very interested in helping a property. Since Bob & Larry were not for sale, this didn’t bode well for the new relationship.
At this point, someone pointed out the clause in our agreement that allowed us to leave if Lyrick was sold. Hmm. At the very least, we thought, we’re free to renegotiate our relationship with HIT. (We had discovered several matters in the relationship with Lyrick that we felt needed addressing, not the least of which was the fact that the huge volume of duplication business VeggieTales brought them was earning them large cash bonuses from their duplication company, which they were failing to report to – much less share with – us.)
Then another call came. Dick Leach, while walking through the Dallas airport, had fallen, struck his head, and died. We were shocked and saddened to lose such a good guy. Bill Haljun, the Big Idea executive that had initiated the Lyrick relationship, flew down for the funeral in Dallas. This development made us even more concerned about giving our distribution rights to HIT. Without Dick on the board and with HIT’s stated disinterest in “other people’s properties,” it seemed Bob & Larry were destined to become unloved stepchildren at HIT, picking up whatever table scraps were left after the “true children” had eaten their fill. (We had already noticed this dynamic at Lyrick when we started accompanying Lyrick staff on sales calls. If Lyrick had an hour with the Wal-Mart buyer, for example, they would often spend the first 40 minutes talking about Barney, and the last 20 on VeggieTales. Even when VeggieTales sales surpassed Barney’s, the “owned property” still got the lion share of the attention. This problem would only get worse, we reckoned, at HIT.)
After a few weeks talking with HIT and several other distributors, it was clear that HIT would not be the best home for VeggieTales. We announced in early summer of 2001 that VeggieTales’ new general market distribution partner would be WEA, the music distribution company at Warner Brothers. WEA owned no children’s properties of their own, so Bob & Larry wouldn’t receive “stepchild” status. On top of the attention we would receive, WEA offered advances large enough to guarantee Jonah could be completed and the company could continue long enough to get back on its feet. Optimism returned to Big Idea for the first time in several years.
10 days after we made the announcement, HIT Entertainment filed suit against us in Dallas federal court, claiming breach of contract. Barney the Dinosaur was hopping mad.
Late 2001 and early 2002 were a mind-boggling flurry of activity. In addition to the storm of legal briefs, motions, counter-motions and depositions required to respond to HIT’s lawsuit, my new president was opening a Big Idea office near his home in Los Angeles (one of his conditions for employment), hiring support staff and two creative development executives from the television business to oversee 3-2-1 Penguins and The Cartoon Adventures of Larryboy. 3-2-1 Penguins was now in production at an animation studio in Canada in an attempt to bring production costs down to a manageable level. (Initially budgeted at $450,000 per film, the latest Penguins video had actually cost $1.2 million.) “Larryboy 2D,” as the new series was called internally, was in production at a studio in Los Angeles, using inexpensive Flash animation technology typical of TV shows like Dexter’s Lab and Power Puff Girls. A new publishing deal with HarperCollins Christian unit Zondervan required the writing and production of 20+ books in the first year alone.
And then there was Jonah. Less than 6 months from its required delivery date, the production was almost hopelessly behind schedule. No matter what we tried, we couldn’t seem to get a grip on the situation internally. We ended up bringing in a “finishing consultant” from Los Angeles – a specialist in the computer-animation world with extensive experience helping the major studios set up CGI production pipelines. The consultant quickly determined that Jonah would not be finished on time unless we brought in more artists and lots more rendering computers. Our $10 million budget now walked out the front door, got in my car, and drove away. My original $7 million budget was turning into a ridiculously funny joke. The production was woefully behind schedule on lighting and final rendering, so we brought in lighting artists from Blue Sky and DNA, the two studios that had just wrapped “Ice Age” and “Jimmy Neutron,” respectively. Our render farm ballooned from 150 computers to more than 500. Out of space and electrical service in our old Woolworths, we rented another shuttered store at the other end of the mall and turned it almost overnight into a second high-tech data center. (Although, I’m fairly certain, it was the world’s only high-tech data center that could only be accessed by walking through a mall food court and the back room of a Dairy Queen.) A fiber optic link was run almost the entire length of the mall, connecting the new “satellite” data center with the mother ship. Several rooms were stuffed with temporary lighting artists working in almost complete darkness (for color integrity issues) and living in temporary housing. They began to look like moles.
All of this was paid for by almost $20 million in advances my new president had brought in from new distribution and publishing deals, a remarkable achievement accomplished in very little time. It was very clear now that Big Idea was going to explode – either in a good way, or a very, very bad way. We had never released more than 3 video in any one year, and now in 2002 we would release one veggie video, three penguins videos and 3 Larryboy videos, on top of 15+ books, a vacation Bible school curriculum, 4 sing-along albums and a flurry of related merchandise including apparel, games, housewares, sew-at-home fabrics, garden gloves and a really cool pirate ship playset that, like the rest of the product, had been designed entirely in-house by Big Idea designers. Oh yeah – we were also about to release our first theatrical feature film.
Did I want to release all of this product? Did every last bit of it have a compelling ministry objective? Did it all fit into my “masterplan” to benefit America’s kids? Frankly, no. None of it was againstour mission, and most of it promoted a biblical value or virtue in some way, shape or form, but the sheer volume was driven not by mission, but by a desperate need to keep Big Idea from collapsing. Many of us felt the tension between our ministry-driven mission and the vast amount of merchandise we were attempting to drive into the market. The pace of work, however, left precious little time for introspection.
What was clear to me was that if all of this new product worked, Big Idea would be healthy again and we could refocus on doing only the things that mattered. If it didn’t…well. I tried not to think about that one.
Continued in Part 7 >