SPACETOONS

Intro

SpaceToon is an integrated media group involved in TV, Radio, licensing, merchandising, online and
interactive products, with operations now extended to Indonesia, Korea and India. It possesses the rights
to the largest library of Arabic dubbed animated cartoons in the Arab world. In addition to the extensive
global animation collection, SpaceToon's in-house studios produce proprietary cartoon programs that
increase awareness of the outside world - the environment, education, health, and family values.
Organizations such as the United Nations Children's Fund (UNICEF) and the World Health
Organization (WHO) use Spacetoon television as a medium to deliver important public service
announcements to the emerging young generation.

SpaceToon is committed to encouraging enlightened ideas and ethical values all over the globe. We
strive to encourage learning appreciation and expression consistent with the interests and understanding
of young people at all levels of learning. SpaceToon TV is dedicated to:

• Cultivate the minds of the viewers to utmost capacity • Become familiar with their cultural heritage •
Strive for excellence in creative expression in all fields of learning, literature, and art • Enlarge students'
concern for and understanding of today's world • Help build a society dedicated to the highest quality of
life in community and nation The Group’s flagship Channel, SpaceToon Kids TV transmits to over 130
million viewers in 22 countries throughout the Middle East and North Africa, 7 days a week, 16 hours a
day. It is the most viewed channel in the kids’ genre in that region. (Source: IPSOS Research Study).

Apart from Arabic, the Group launched and English language channel, in 2005 that broadcasts in the
Middle East and North Africa, and a channel dedicated to teens. SpaceToon now operates channels in
English, Indonesian, Korean and Hindi.

SpaceToon Production has produced a 52 episode educational TV series called “Data City”. SpaceToon
owns the licensing rights to some of the hottest brand names in children's characters, including the well-
loved Let’s & Go.

SpaceToon was the first channel in the world to categorize its programs into ten “planets” on the basis of
suitability for a particular audience in a solar system of ten planets (Action, Adventure, Bon Bon, Comedy,
Education, Girls, History, Movie, Science and Sports). This concept is protected by license.

In publishing, the SpaceToon Kids Magazine encourages them to learn about the world around them.
Cartoon characters from TV programs guide kids through each section of the magazine, helping them to
learn through fun. SpaceToon Girls Magazine is the only magazine entirely dedicated to young girls. The
magazine is packed with craft activities, health & beauty issues, along with stories from the "Girls Planet"
TV programs. Over 200,000 copies of Spacetoon Kids Magazine are printed every month and are
distributed throughout the region. Spacetoon “Girl’s” Magazine has a monthly print run of 50,000 copies.

The company produced a “Mini Theater” which plays in the major cities of the GCC countries. The
productions are based on animated cartoons such as “Popeye”, “Pink Panther”, “Detective Conan” etc.
SpaceToon also developed the “Think & Play” concept, which allows kids to take part in activities such as
the Let’s & Go racing event (which attracted over 140,000 paying competitors in Dubai, Saudi Arabia and
Egypt).

SpaceToon business footprint covers the Middle East, North Africa, Indonesia, Korea, Hong Kong,
Canada, Japan, and India.

Interview

ndiantelevision.com's interview with Spacetoon India MD & CEO Rajiv Sangari

 

'With the launch of the kids

channel, we are ready to scale
up the verticals'

Posted on 16 February 2009

 

I t has been a long wait outside the ring. After building up verticals in the licensing,
publishing and merchandising space, Spacetoon has launched its kids channel to combat
against multinationals like Turner, Walt Disney and Viacom in the tough Indian market.

A licensing and merchandising deal with Emerging Media, owner of the IPL winning team
Rajasthan Royals, has put the company on a totally different pedestal. Talks are also on
with a few other sporting goliaths to expand the L&M portfolio.

Spacetoon Kids TV, however, will evolve as the prime property and will guzzle over 50 per
cent of the company's Rs 1 billion investment plan.

In India, the group has floated Kids Media India (KMI), a company that will take care of the
TV and licensing business. Kids Animation India is the other arm that will look after the
publishing activities.

The shareholding has also been restructured with Japanese firm Animation International
holding 51 per cent stake in KMI. Dubai-based Spacetoon Media Group holds the remaining
with a small stake as sweat equity resting with Spacetoon India managing director and CEO
Rajiv Sangari.

In an interview with Indiantelevision.com's Anindita Sarkar, Sangari talks about the

company's growth plans across the verticals.

Excerpts:
 
What took you so long to launch in India?
Since the germination of the idea way back in 2004-end, we have spent a long time testing
the market. As the Indian economy and the TV industry went on a zoom and prices
skyrocketed, we had to rethink our strategies as we were going to occupy a niche space.
With distribution, marketing and all kinds of operational spends going beserk as Hindi
general entertainment channels got launched, it would have made no business sense to
launch a kids channel. Frankly, it would have been a business hara-kiri. Now the prices
have corrected and things are much more in control. Despite an overall bleak scenario and
a tough advertising market, launching at this moment definitely makes more business
sense.
The shareholding for the Indian venture has changed with Japanese firm
Animation International (AI) holding 51% stake in Kids Media India. Was the
delay partly caused by this?
Both Spacetoon and AI have relations since the last 25 years and they have been
partnering and co-operating with each other on many businesses together. Hence,
changing of the hands in shareholding doesn't have much to do with any kind of interest
level subsiding or increasing. It is a strategic move by both partners of re-strategising and
restructuring their operations amongst themselves. Most of the East and South East Asian
operations, for example, will be monitored by AI, while most of the Western Asian,
European and Eastern European operations will come directly under Spacetoon. I would
term this as strategic restructuring.
Spacetoon was in talks with investors to raise money. Is that plan still on?
Spacetoon was in talks with a few players and we had already determined 3-4 of them at
various stages of our discussions. But most of them wanted to basically take advantage of
the position of our fund raising, rather than sharing our passion. Either they wanted
majority stake or at some point they wanted us to exit. This did not go with our strategy for
India.

Though we realise that for taking our verticals to the next level we require some support,
we are equipped as of now to handle it on our own. But if we get an extra push in terms of
a partner who can value our strength, experience and hard work which has gone behind
making the company and the brand what it is today, we will definitely look at the
possibility. India's economy and retail can only grow and we have 360 million kids. We
require a partner who thinks and aligns with us for long term.
 
Did you first focus on developing the licensing, publishing and merchandising
platform before stepping into the kids broadcasting space?
That is the business model Spacetoon has followed in other markets. We are doing the
same thing here. For over a period of 3 years now, other than TV launch, we have
successfully launched our licensing, publishing and merchandising divisions and are very
soon launching our own IP programmes.

We are glad that we did not divest then. We have done the tough job of laying out a
platform for licensing and merchandising. After the launch of the kids channel, the time has
come for us to scale up the verticals.
 
How much is Spacetoon investing in India?
We plan to invest Rs 1 billion over three years. Out of this, about 50 per cent upwards will
be consumed by the TV operations.
Why did KMI decide to launch a kids channel when the genre has actually shrunk
a bit last year and the revenue size at Rs 150 crore is still too small to take in so
many players?
We need to realise that kids business is not driven completely by TV broadcasting. Unlike
general entertainment channels, ad revenue is important but not the only source of income
in the kids genre. It's always the ancillary units like merchandising, publishing, etc. which
will help it take to the next level. And TV business is a long term game.
 

'Kids business is not driven completely by TV broadcasting.

Ad revenue is important but not the only source of income in
the kids genre. It's always the ancillary units like
merchandising and publishing which will help it take to the
next level'

Earlier, Spacetoon Kids TV was looking at investing Rs 250 million for carriage in
delivery platforms such as cable TV networks and DTH. However, that number has
been scaled down. Why?
Haven't others too? It's simple, the market today doesn't allow us or anyone to do so. I
hear from some sources that most of the top to small TV channels have slashed down their
distribution disbursements. And, especially in kids genre, you just can't support such a
large distribution budget.
The channel is still not well distributed. How are you planning to tackle this and
by when do we see it more visible?
Our focus is not only to tap the Tam cities but also other markets. As of today, our
estimates are that we have penetrated over 10 million homes and we expect to do over 15
million by the middle of this year. By year-end, we should be touching 25 million homes.
And, don't forget, it's only four weeks since we launched. We realise it will take minumum
3-4 months before we start getting visible across all markets.
What are the distribution deals you with stitched with the MSOs and the DTH
operators?
We are in talks with the direct-to-home operators. As far as cable goes, we are available in
some Hathway Cable & Datacom networks. We have also signed up other cable operators,
particularly for their digital viewers. Distribution is a gradual build-up.
Spacetoon Kids TV will have to jostle with seven existing channels to tap into 360
million kids in India. How do you find space in this tough market?
Each one of us has a different style, programming methodologies, and formats. Our
channel will be focusing a lot on moral and social values, packaged with lots of
entertainment content.
What is the different positioning you are taking?
Spacetoon will divide the day into 10 planets. Unlike running half-hour episodes back to
back, we will be giving the kids a mix of several things. There will be fillers which are moral
based, messages, ads, packaging, promos, etc. This will ensure a different look during the
whole day.
Do we also get to see localised content as part of the programming mix?
We definitely are looking towards creating localised programming very soon. This will be
mostly live action-based programming. There are discussions going on with various
producers to this effect.
What are your other marketing plans and spends for the channel?
We will be creating a touch base by tapping thousands of schools in India. We realise that if
we have to tap the minds of the kids, there is no better place than their learning ground -
school. We are creating a very good value-based school-contact programme, a key area
where most of our energy is going to be focused in the first year.

We will also be having events from April onwards in high public areas like malls.
What is the revenue Spacetoon is projecting and how does it break up in terms of
the channel and other verticals?
I would not want to put across numbers now. Nobody can predict the forthcoming financials
in today's market. But our major revenue driver will be merchandising, which is in full
throttle. Following that are our publishing and licensing activities. As for TV revenue, we are
expecting it to start from the later part of the year. It will take us some time to penetrate
the market and grab space in the minds of the kids.

What are your expansion plans in terms of licensing and merchandising?

We have tapped over 69 licensees in the last 14 months. These are translating into
products that will get into the market during the course of this year. We already represent
some top companies in the world for licensing and there are few more coming our way in
the next few months to make our portfolio more robust and meaningful.

We observed that our portfolio was tilted more towards the boy category. But now with
Hello Kitty and Garfield coming our way, I think we have one of the best characters in the
girls genre.
What are your plans with Rajasthan Royals?
We are in hot pursuit to come out with products before the first week of April when the IPL
kicks off. We have already worked out our strategies to tap the right licensees who will be
able to add value to this fantastic brand on the ground level through merchandising.

We have a three-year deal with Emerging Media and are targeting Rs 200 million of retail
business in the first year. Since the time is very short, we are channelising all our resources
towards this.

We are also in discussions with few more goliaths from other sports, especially big
international clubs. We hope to stitch deals with some of them soon.

Planning means looking ahead and chalking out future courses of action to be followed. It is a
preparatory step. It is a systematic activity which determines when, how and who is going to
perform a specific job. Planning is a detailed programme regarding future courses of action. It
is rightly said “Well plan is half done”. Therefore planning takes into consideration available
& prospective human and physical resources of the organization so as to get effective co-
ordination, contribution & perfect adjustment. It is the basic management function which
includes formulation of one or more detailed plans to achieve optimum balance of needs or
demands with the available resources.

According to Urwick, “Planning is a mental predisposition to do things in orderly way, to think

before acting and to act in the light of facts rather than guesses”. Planning is deciding best
alternative among others to perform different managerial functions in order to achieve
predetermined goals.

According to Koontz & O’Donell, “Planning is deciding in advance what to do, how to do and who is to do it. Planning
bridges the gap between where we are to, where we want to go. It makes possible things to occur which would not
otherwise occur”.

Organizing is the function of management which follows planning. It is a function in which the synchronization and
combination of human, physical and financial resources takes place. All the three resources are important to get
results. Therefore, organizational function helps in achievement of results which in fact is important for the functioning
of a concern. According to Chester Barnard, “Organizing is a function by which the concern is able to define the role
positions, the jobs related and the co- ordination between authority and responsibility. Hence, a manager always has
to organize in order to get results.

Staffing Function of Management

The managerial function of staffing involves manning the organization structure through proper and effective selection, appraisal and dev
of the personnels to fill the roles assigned to the employers/workforce.

According to Theo Haimann, “Staffing pertains to recruitment, selection, development and compensation of subordinates.”

DIRECTING is said to be a process in which the managers instruct, guide and oversee the performance of the
workers to achieve predetermined goals. Directing is said to be the heart of management
process. Planning, organizing, staffing have got no importance if direction function does not take place.

Directing initiates action and it is from here actual work starts. Direction is said to be consisting of human factors. In
simple words, it can be described as providing guidance to workers is doing work. In field of management, direction is
said to be all those activities which are designed to encourage the subordinates to work effectively and efficiently.
According to Human, “Directing consists of process or technique by which instruction can be issued and operations
can be carried out as originally planned” Therefore, Directing is the function of guiding, inspiring, overseeing and
instructing people towards accomplishment of organizational goals.

What is Controlling?
Controlling consists of verifying whether everything occurs in confirmities with the plans adopted, instructions issued
and principles established. Controlling ensures that there is effective and efficient utilization of organizational
resources so as to achieve the planned goals. Controlling measures the deviation of actual performance from the
standard performance, discovers the causes of such deviations and helps in taking corrective actions
According to Brech, “Controlling is a systematic exercise which is called as a process of checking actual performance
against the standards or plans with a view to ensure adequate progress and also recording such experience as is
gained as a contribution to possible future needs.”

According to Donnell, “Just as a navigator continually takes reading to ensure whether he is relative to a planned
action, so should a business manager continually take reading to assure himself that his enterprise is on right
course.”