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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 ³Data 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 ³planets´ 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

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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 ³Girl¶s Magazine has a monthly print run of 50,000 copies.

The company produced a ³Mini Theater´ which plays in the major cities of the GCC countries. The

productions are based on animated cartoons such as ³Popeye´, ³Pink Panther´, ³Detective Conan´ etc.

SpaceToon also developed the ³Think & 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 kidschannel, 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,

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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 teamRajasthan Royals, has put the company on a totally different pedestal. Talks are also onwith 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 percent 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 theTV and licensing business. Kids Animation India is the other arm that will look after thepublishing activities.

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

In an interview with Indiantelevision.com's Anindita Sarkar , Sangari talks about thecompany's growth plans across the verticals.

Ex cerpts:

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 testingthe market. As the Indian economy and the TV industry went on a zoom and pricesskyrocketed, 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 tolaunch a kids channel. Frankly, it would have been a business hara-kiri. Now the prices havecorrected and things are much more in control. Despite an overall bleak scenario and atough advertising market, launching at this moment definitely makes more business sense.

The shareholding for the Indian venture has changed with Japanese firmAnimation International (AI) holding 51% stake in Kids Media India. Was thedelay partly caused by this?Both Spacetoon and AI have relations since the last 25 years and they have been partneringand co-operating with each other on many businesses together. Hence, changing of thehands in shareholding doesn't have much to do with any kind of interest level subsiding orincreasing. It is a strategic move by both partners of re-strategising and restructuring theiroperations 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 EasternEuropean operations will come directly under Spacetoon. I would term this as strategicrestructuring.

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 atvarious 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 wantedmajority stake or at some point they wanted us to exit. This did not go with our strategy for

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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 behindmaking 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 apartner who thinks and aligns with us for long term.

Did you first focus on developing the licensing, publishing and merchandisingplatform before stepping into the kids broadcasting space?That is the business model Spacetoon has followed in other markets. We are doing thesame thing here. For over a period of 3 years now, other than TV launch, we havesuccessfully launched our licensing, publishing and merchandising divisions and are verysoon 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 hascome 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 willbe consumed by the TV operations.

Why did KMI decide to launch a kids channel when the genre has actually shrunk abit last year and the revenue size at Rs 150 crore is still too small to take in somany players?We need to realise that kids business is not driven completely by TV broadcasting. Unlikegeneral 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. whichwill 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 likemerchandising and publishing which will help it take to the

next level'

Earlier, Spacetoon Kids TV was looking at investing Rs 250 million for carriage indelivery platforms such as cable TV networks and DTH. However, that number hasbeen scaled down. Why?Haven't others too? It's simple, the market today doesn't allow us or anyone to do so. Ihear from some sources that most of the top to small TV channels have slashed down theirdistribution disbursements. And, especially in kids genre, you just can't support such a largedistribution budget.

The channel is still not well distributed. How are you planning to tackle this and by

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when do we see it more visible?Our focus is not only to tap the Tam cities but also other markets. As of today, ourestimates are that we have penetrated over 10 million homes and we expect to do over 15million 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 minumum3-4 months before we start getting visible across all markets.

What are the distribution deals you with stitched with the MSOs and the DTHoperators?We are in talks with the direct-to-home operators. As far as cable goes, we are available insome 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 360million 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 channelwill be focusing a lot on moral and social values, packaged with lots of entertainmentcontent.

What is the different positioning you are taking?Spacetoon will divide the day into 10 planets. Unlike running half-hour episodes back toback, we will be giving the kids a mix of several things. There will be fillers which are moralbased, messages, ads, packaging, promos, etc. This will ensure a different look during thewhole 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 bemostly live action-based programming. There are discussions going on with variousproducers 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 areawhere 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 financialsin today's market. But our major revenue driver will be merchandising, which is in fullthrottle. Following that are our publishing and licensing activities. As for TV revenue, we areexpecting it to start from the later part of the year. It will take us some time to penetratethe 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 productsthat will get into the market during the course of this year. We already represent some topcompanies in the world for licensing and there are few more coming our way in the next few

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months to make our portfolio more robust and meaningful.

We observed that our portfolio was tilted more towards the boy category. But now withHello Kitty and Garfield coming our way, I think we have one of the best characters in thegirls 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 IPLkicks off. We have already worked out our strategies to tap the right licensees who will beable 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 retailbusiness in the first year. Since the time is very short, we are channelising all our resourcestowards this.

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

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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 isrightly said ³Well 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, ³Planning 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 bestalternative among others to perform different managerial functions in order to achieve

predetermined goals.

According to Koontz & O¶Donell, ³Planning is deciding in advance what to do, how to do and who is to do it. Planningbridges the gap between where we are to, where we want to go. It makes possible things to occur which would nototherwise 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 , ³Organizing 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, appraisof the personnels to fill the roles assigned to the employers/workforce.

According to Theo Haimann, ³Staffing 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 theworkers 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. Insimple words, it can be described as providing guidance to workers is doing work. In field of management, direction issaid to be all those activities which are designed to encourage the subordinates to work effectively and efficiently.

According to Human, ³Directing consists of process or technique by which instruction can be issued and operationscan be carried out as originally planned´ Therefore, Directing is the function of guiding, inspiring, overseeing andinstructing people towards accomplishment of organizational goals.

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