4Kids Entertainment Inc. - On the Verge: 1990s

On the Verge: 1990s

With Kahn at its helm, LCI expanded its operations in the early 1990s by creating two new subsidiaries: The Summit Media Group, Inc. and 4Kids Productions, Inc. The former was established to handle syndication rights for various licensed products in both print and broadcast media, while the latter maintained a studio to buy and produce animated and live-action properties, which it then distributed to the television, home video, and theatrical markets.

Kahn and LCI turned in a new direction in the middle of the decade by launching the World Martial Arts Council (WMAC) and a new weekly television series, WMAC Masters, which brought together the world's most talented martial artists in a live-action format. Shannon Lee, daughter of martial arts champion Bruce Lee, lent considerable credibility to the show and its contestants by hosting. LCI hired Bandai American Incorporated to produce WMAC action figures and other merchandise.

LCI's lucrative licensing agreement with Nintendo continued to fuel its income as more and more kids bought gaming systems and Nintendo software. Next came the Game Boy, a hand-held portable gaming system that came with its own customized video games. In addition to the Zelda franchise, which had spawned a successful sequel, Nintendo had introduced Mario Bros., Donkey Kong, and in 1996 came a game about "pocket monsters" called Pokémon. The game consisted of catching unusually named creatures, taming them, and helping them "evolve" into stronger versions of themselves. Pokémon, previously introduced in Japan, became the must-have gaming cartridge of Game Boy players in the United States. LCI wasted no time in developing strategies to market the endearing Pokémon characters to youngsters everywhere.

As Pokémon mania began to take hold, LCI turned its attention to an entirely new area in 1987 when it agreed to handle licensing for the American Heart Association (AHA). The nonprofit AHA hired LCI to market its animated spokesperson, "Ticker," as a way to raise additional funds for the health organization. In turn, LCI merchandised Ticker to youngsters in a variety of products, from plush toys to apparel to books—all to promote cardio health.

By 1998 LCI had two revenue-producing television shows, WMAC Masters and Pokémon. Regarding the latter, LCI had also signed with Hasbro Inc. to produce plush toys, of which Pokémon character Pikachi (a bright yellow ratlike creature) was the most popular. An important milestone was also reached in children's television programming when the Toronto-based Nelvana signed a two-year contract with CBS to provide its morning television lineup. At the time, no television producer had been given exclusive rights to provide an entire block of children's programming. This would evolve in the coming years with LCI mastering the art of the deal. In the meantime, however, the company had reached total net revenues of just under $14.8 million for 1998, an increase of 46 percent over 1997's $10.1 million. Net income, however, rose significantly from 1997's $739,000 to $2.7 million.

LCI's fortunes changed exponentially in 1999. As the exclusive licensing agent for Nintendo, as well as other firms, LCI had both the notice and respect of the corporate world. Nintendo released the Nintendo 64 gaming system and a slew of Pokémon games to go with it, while LCI had inked a new deal linking monster truck promoter PACE Motor Sports and World Championship Wrestling (WCW). Additional Pokémon licensing included a three-year contract with Golden Books to produce 17 Pokémon books and an array of stickers and postcards for youngsters during the summer, just before the big screen debut of the first Pokémon movie by Warner Bros.

Pokémon mania hit a fever pitch with its characters gracing both the small and big screens, and a merchandising rollout unlike anything ever seen before. In its first day at theaters, Pokémon racked up $10 million in ticket sales and Warner Bros. completely ran out of the promotional trading cards it was distributing to early ticket buyers. By December, Golden Books had 30 million Pokémon titles in circulation, while Burger King's promotion of 100 million action figures and special gold-plated trading cards, placed in kids' meals, disappeared in a matter of weeks.

The hype fueled explosive growth for LCI and garnered it the top slot in Fortune magazine's "100 Fastest Growing Companies" in 1999. The company ended its remarkable year with net revenues of $60.5 million and net income of $23.7 million (up from 1998's $2.7 million).