COMPANY: The Itsy Bitsy Entertainment Co.


TYPE OF BUSINESS: Licensing agent for preschool entertainment properties

FOUNDER: Kenn Viselman, former head of U.S. marketing at Britt Allcroft Inc.

CAPITAL: $1.8 million, at least $400,000 from Viselman's personal savings

KEY COMPETITION: Momentum Partners (agent for Lamb Chop's Play-Along), licensing divisions at companies like Children's Television Workshop

COMPETITIVE STRATEGY: Emphasize management's reputation, promote heavily

The Itsy Bitsy Entertainment Co. is being built on sheer will and a thick Rolodex. "What I do is purely about keeping control," says Kenn Viselman, the company's founder. "When you're a small company, and you enter into a licensing agreement with a big company, there's always the threat that the big company might roll right over you. My job is to maintain control for the licenser and either bully or romance the licensees." What cutthroat market is he talking about? Merchandise for preschoolers.

Itsy Bitsy has been shaking up the licensing industry since March 1995, when Viselman first boasted that his start-up could turn kids' entertainment properties into merchandising bonanzas. Itsy Bitsy helps media companies (licensers) sell the rights to their characters and stories to other companies (licensees), such as apparel and toy makers. It also brings the stories to other media, like videos and theatrical films.

The company works with fewer licensees than most of its competitors do. It takes 25% to 50% of what the licensees pay the licensers in royalties. (On average licensers receive 10% of the gross sales of merchandise.) Itsy Bitsy posted revenues of $350,000 in its first year and projected revenues of $1.8 million for fiscal 1996. Viselman anticipates it will break even in 1997, with profits hitting $10 million by 2000. Total revenues are expected to reach $25 million, with retail sales of licensed products hitting $300 million.

Ambitious? Certainly. But Viselman's track record is impressive. He worked with British producer Britt Allcroft on her show, Shining Time Station. The result: retail sales of more than $1 billion worldwide. And several Shining Time Station products have been ranked among the 15 top-selling toys in the United States on the Toy Book's What's Hot list since 1993.

Despite its small size, Itsy Bitsy has the reputation of being incredibly influential in product development. It also distinguishes itself by lavishly promoting the characters it licenses. "Usually, when an agent does a deal," Viselman says, "the agent puts things together and then walks away, hoping for a hit." But Itsy Bitsy's a cheerleader, generating industry buzz and widening the properties' exposure.

According to Duracell's Toy Industry Forecast, Americans spend $10 billion each year on licensed or movie tie-in toys. Itsy Bitsy targets the country's 24 million children under age 6. Viselman is now helping negotiate a film deal for the Miss Spider books, which have sold more than one million copies. To date, handling a British series, Tots TV, has been his biggest success. One licensee, Anchor Bay Entertainment, paid an advance of more than $500,000 for a planned video series. And since its October debut, Tots has been picked up by 279 PBS stations--nearly as many stations as megahits Sesame Street and Barney, which air in some 300 markets.

"Our pipeline is really full," confides Alice Cahn, the director of children's programming for PBS, "but Itsy Bitsy has two other projects that we're very interested in. We're absolutely serious about doing more with them."

Resources:To find out more about how the Itsy Bitsy Entertainment Co. is promoting Tots TV, see the Tots TV Web site. To read up on licensing, try The Toy Book and The Licensing Book, a pair of prominent trade magazines published by the Adventure Publishing Group. The Toy Book's What's Hot list provides a monthly ranking, chosen by U.S. retailers, of the top-selling toys.

The Licensing Book covers all sorts of licensed products, not just toys. Each of the trade publications is monthly. Subscriptions cost $36; to order one, write Theresa Orlando, Adventure Publishing Group, 1501 Broadway, Suite 500, New York, NY 10036, or call 212-575-4510.

ITSY BITSY ENTERTAINMENT, Kenn Viselman, 156 Fifth Ave., Suite 800, New York, NY 10010; 212-989-3660