Halifax-based DHX Media will be buying an 80-per-cent stake in the Peanuts brand.Blue Sky Animation
You're a good brand, Charlie Brown.
And now you're a Canadian-owned one as well: On Wednesday, Halifax-based DHX Media Ltd. announced it would acquire a majority stake in Peanuts Worldwide LLC as part of a $345-million (U.S.) purchase of the entertainment unit of Iconix Brand Group Inc. The sale will add Peanuts and cartoon character Strawberry Shortcake to DHX's portfolio of children's brands.
For millions of people, that Vince Guaraldi jazz strain from A Charlie Brown Christmas immediately invokes the melancholy at the heart of an entire cartoon franchise known for its emotional complexity. It's exactly that attachment, formed in childhood, that DHX is counting on: In a Netflix and YouTube world, where supply of media content is seemingly infinite, there is a finite supply of characters and shows that parents, grandparents and other caregivers recognize and love.
"With children's and family programming, it's co-viewing on the couch, and the decision-makers are parents and grandparents. Given an infinity of choice, they choose what they recognize," said DHX executive chairman and co-founder Michael Donovan, adding that the company has noticed similar trends with other properties it owns, such as the characters Inspector Gadget, Caillou, and Teletubbies.
"What we've done is just bolted on one of the most valuable works from [a previous] era, to build out the power of that. That's the idea behind this."
While not nearly as iconic as Snoopy, Linus, Lucy and the gang, the character Strawberry Shortcake could serve the same purpose, DHX believes. In fact, the sweet-scented character popular with eighties kids may have paved the way to Peanuts; DHX has been working with Iconix for more than a year to develop a new Strawberry Shortcake series and to "revitalize" that brand. That is still in the works, and the Canadian company will now own all of the intellectual property.
"It was because of that relationship that we were able to finally enter into this agreement, we think. We think it's partly because we started out with this existing partnership, that we had a dialogue," Mr. Donovan said.
DHX, which also owns newer brands, such as Bob the Builder, distributes TV shows around the world and owns the Family Channel in Canada as well as WildBrain, which specializes in kids' content for YouTube and is an important area of growth. It also owns Copyright Promotions Licensing Group, which manages licensing for brands – such as Sesame Street-branded shoes in Germany and The Simpsons T-shirts in Zara stores. Mr. Donovan believes there are revenue opportunities for Peanuts across its business – including new TV shows – but no plans are in place yet.
The company also believes there is room to grow in markets such as China and Japan, where Peanuts is popular but "underrepresented." The characters are licensed in more than 100 countries, and Peanuts has partnerships with Hallmark Cards, Zara stores, and film studio Warner Bros., among others. The brand's advertising partnership with MetLife, which put Snoopy in insurance ads for more than three decades, is coming to an end.
Iconix bought the brand from E.W. Scripps' United Feature Syndicate in 2010 for $175-million. But weighed down by debt, it began exploring a sale, according to reports earlier this year.
Peanuts has remained healthy: on Iconix's third-quarter earnings call, CEO John Haugh said Peanuts worldwide licensing revenue was "probably 30-per-cent-plus higher today than it was when we acquired the brand."
The Peanuts Movie, which was released by Twenty-First Century Fox Inc. in 2015, grossed $246-million worldwide according to Box Office Mojo.
A 20-per-cent stake in the Peanuts brand will remain in the hands of the family of creator Charles Schulz. DHX says it intends to work closely with the family to preserve Mr. Schulz's legacy.
"I can't tell you how keenly we – and I personally – feel the responsibility we've taken on here for this legacy," Mr. Donovan said. "We feel tremendously that this is not just another asset; it's a responsibility. We intend to do everything we can to get it right. Although maybe what I really need to say is, good grief."