Santa Cruz Sentinel from Santa Cruz, California • Page 10

A-10 SANJAP.RUZ SENTINEL Saturday, October 19, 2002 (BED BEST VALUE at AFFORDABLE PRICES 4Kids Continued from Page Al packed Japanese cartoons to appeal to the boys who make up roughly half of Nickelodeon's two million Saturday-morning viewers. The goal isn't just advertising dollars. Mr. Kahn's 4Kids specializes in licensing Japanese creative properties in the United States, and its hottest properties, especially Pokemon, are cooling off. The company is hoping it can woo boys to its shows and induce them to buy action figures, video games, game cards and other tie-ins to its new shows, yielding big royalties.

The formula is already producing good results on the WB Network, which runs 4Kids' English-language productions of the Japanese cartoons "Pokemon" and "Yu-Gi-Oh" on Saturday mornings. Though it started weak last season, "Yu-Gi-Oh," the TN FlFPTH 'fie of a boy who travels 111 UVjI I II through an underworld of card sharks and has topped the ratings so far this year among boys under age U. Boys are lining up at stores to buy Yu-Gi-Oh cards. Analysts expect retail sales of Yu-Gi-Oh products of as much as $400 million this year. As holder of U.S.

rights to the property, 4Kids would take a slice of that. In its deal with Fox, 4Kids company similarly is banking on toys and other products to make the gamble pay off. Mr. Kahn says he already has more than $25 million in advertising commitments for the first year from food, toy and other vendors albeit with ratings-guarantee clauses for some. Profits, he says, will come from the product tie-ins.

Since the launch of FoxBox, 4Kids stock has climbed strongly; hitting a 52-week high this week of $27.74. Thursday, it closed at $27.45, up 50 cents, in 4 p.m. New York Stock Exchange composite trading, but that's a long way from the $90 high it reached in 1999 at the height of on the space villains in the ring and dispatches them into space with head locks, body slams and other wrestling maneuvers. Compare that to Nickelodeon's Saturday-morning anchor, "SpongeBob Square Pants," about the mild misadventures of a sea sponge and an ensemble of supporting aquatic characters. In "Jimmy Neutron," the 10-year-old hero is a genius who sports Elvis-style hair and creates mayhem with his own grandiose experiments.

The animated sitcom "Hey Arnold" focuses on a racially diverse group of earnest adolescents coping with everything from romantic crushes to sinister developers threatening their inner-city neighborhood. Kahn says he may hear from some parents who deplore the violence in the FoxBox shows. The father of four says his shows don't abet violent behavior, and he argues that family has greater impact than television programming on a child's psyche. "Kids watch their parents smoke and they go out and buy bubble-gum cigarettes," he says. "I find that more disconcerting than watching superhero cartoons." Kahn looks like the personification of a cartoon action hero, with a weightlifter's 6-foot-l, 280-pound frame.

"The only real thing I take seriously is the gym," he says. "You'll find me every morning at 5:30 lifting weights. I can bench press 500 pounds." He is the oldest among the 160 employees of 4Kids, "but I'm the strongest." He wears an electronic police beeper a gift, he says, from some well-placed friends in law enforcement on his belt at all times. The vibrating device alerts him to high-speed chases, major crimes and the like around New York City. He uses it to avoid traffic snails, but there's also the fact that as a child, he says, "I always wanted to be a cop." He first started working his merchandising magic at Coleco Enterprises.

While head of the company's marketing and development, Kahn read an article in The Wall Street Journal about someone who ran a make-believe hospital for toy babies and sold them through an adoption agency. Xavier Roberts, the Atlanta businessman who owned the rights to the dolls, was having a hard time persuading major toy companies to pick up on the downbeat idea. Kahn showed up to seal a deal for Coleco to market the dolls, and thus began the Cabbage Patch Kids craze. That lasted about three years, and after it ended, so did Coleco, which folded in 1989. Kahn then bought Leisure Concepts the predecessor to 4Kids, and struck an alliance with Nintendo Ltd.

to become a licensing agent, selling the merchandise rights to such big videogame properties as Donkey Kong and Mario Brothers to U.S. companies. In the mid-1990s, he negotiated toy and video-game deals for the Worldwide Wrestling Federation. During a visit to Japan in the fall of 1998, he saw Japanese children lined up outside toy stores awaiting the next shipment of little dolls called Pocket Monsters. Nintendo feared that they were too Japanese for Western tastes.

Kahn convinced his old ally otherwise and then secured Hasbro Inc. to make a line of Pokemon toys for the U.S. "American and Japanese boys have similar appetites for action-oriented shows," he says. "In many ways, we in the U.S. have this big focus group in Japan." Since the rechristened Pokemon charter line of 150 little monsters came out in the fall of 1998, Americans have plunked down more than $15 billion for Pokemon stuff sneakers and party goods, breakfast cereals and vitamins, trading cards and video games.

With a piece of just about all of it except video games, 4Kids has taken in about $140 million in Pokemon revenue. But sales of Pokemon products, the company's main source of licensing revenue, have been declining, to about $30 million last year from $85 million in 2000. That's why the Saturday-morning TV gamble is critical to 4Kids. the Pokemon craze. Peter Lynch, the former top stock picker for Fidelity Investments' Magellan Fund, says he has bought some shares for his personal account and is encouraged by "a small research group of 10-year-old boys" he knows who watch "Yu-Gi-Oh" and "just love the show." At 4Kids' studio in midtown Manhattan, carpenters are connecting the 11th floors of three adjacent buildings to make space for some 90 sketch artists, music scorers and producers.

Though the shows arrive from Japan, 4Kids still has to produce translations, dub the films and compose music that is better-suited to U.S. tastes. "We're soon going to a 24-hours-a-day-seven-days-a-week production schedule," says Norman Grossfeld, president of 4Kids Productions the unit that is producing the shows. He says production also involves exercising a bit of creative latitude. The U.S.

versions of Japanese shows, he says, sometimes need a lighter touch. In "Kirby" for instance, King Dedede, the villain, is mean and dumb in the Japanese version. For the U.S., Grossfeld gave the character a Louisiana drawl and got someone who sounds like the late comedian Paul Lynde to provide the voice of his sidekick, who loves bossing the peasants around. But the action of the Japanese cartoons stays. In "Ultraman: Tiga," the eponymous hero destroys enemy monsters with laser beams that emanate from energy sources hidden in his body.

The action is laced with campy humor. During a break in a battle scene in one recent episode, a warrior says the monster "is uglier than my mother-in-law." A comrade responds: "Yes, but her nose is bigger." The climax generally entails the monster villain exploding into bits. In "Ultimate Muscle," Earth is threatened by a band of intergalactic wrestling types. Kin-nikuman is a cowardly and rather homely hero who uses flatulence to fly. Reluctantly, he takes WIDE SELECTION OF PRODUCTS AND UrTIUNo KNOWLEDGEABLE SALES TEAM FAST SHIPPING COMPREHENSIVE UnRRANTIFS Moon Bay, tried to buy the local Citizens water company from American Water Works last year.

"They turned us down," said George Irving, manager of the sanitary district. "They weren't interested in negotiating." The water district hired an apprais-' er, but the water company still wasn't interested. "We had to get a court order," Irving said. "They wouldn't let us on the property." A court ruling on the value of the water system is expected in March. American Water Works Co.

paid a premium to buy the system, and Irving worries that will mean customers will pay higher rates. The company insisted that won't be the case, but Irving is skeptical. "That flies in the face of logic," he said. To voice your opinion People who want to participate in the decisions on the rate hike and acquisition of California-American Water's Felton business by RWE of Germany have these options: WRITE TO THE JUDGE: Administrative Law Judge Janet Econome, California Public Utilities Commission, 505 Van Ness Room 5113, San Francisco, CA 94102. WRITE TO SLV WATER DISTRICT: San Lorenzo Valley Water District, 13060 Highway 9, Boulder Creek, CA 95006.

WRITE TO RWE: Herr Harry RoeU, RWE Aktiengesellschaft, Obernplatz 1, 45128 Essen, Germany, or e-mail bill.mcandrewsrwe.com. Source: County Supervisor Jeff Almquist Water Continued from Page Al issue," said Abnquist, who lives in Fel-ton and is a customer of American Water Works. The proposed acquisition is under review by the California Public Utilities Commission, which also will decide on the rate hike for Felton customers. The process for the water district to acquire the Felton water system using eminent domain is lengthy and complicated. The water district and the water company would submit an appraisal to the court, which would set a value.

The water district also would have to get permission from the Local Agency Formation Commission, a regional agency that makes decisions on boundary issues. Almquist said the review process could take seven months. Almquist is looking for residents with financial expertise to review the rate-hike request. He hopes the PUC will schedule a hearing in Felton if enough residents request it. When American Water Works bought out Citizens, company officials said rate hikes would be on hold until 2005.

But American Water Works spokesman Kevin Tilden said that condition was not included in the PUC decision. He contended it was accurate to describe the rate hike as a 57 percent increase. The increase would be 4 percent for homes and 82 percent for fire service customers. Almquist said local people would still end up paying higher rates. Accountant Tom Lindsay agreed.

"We're going to eat it, so we've got to nip it in the bud," he said. Felton isn't the only community in the state fighting for its water. The Montara Sanitary District, which has 5,500 customers near Half SLV water director Lawrence Prather, who is seeking re-election on Nov. 5, told the crowd he would rather buy the water system with a friendly offer than by condemnation. He was optimistic about the impact on Felton residents, who pay more for water than people living in neighboring towns served by the SLV water district.

One customer reported a recent two-month bill of $326. "I believe we can pull this off without raising your rates," Prather said. But the five-member water board, which met later Thursday, didn't take any vote. The board next meets on Nov. 7.

"There is still a lot of unknowns," said director Jim Rapoza, who is also seeking re-election. "We need to let the people in Felton know how much will this cost." Almquist's office is collecting letters protesting the proposed acquisition and rate hike. A decision on the rate hike is due in February or March. JjAffortlable Task f'Chalr! features: Backrest, 11 Verticle lumbar and easy adjustments AdjuslalJleJ Task Chair! features: Adjustable ffwmm seat pan, Bach rest -andarms $900 Contact Jondi Cumz at 'A To 4 111(0 vv JO 1 1 it i 1 i T-- 4 Advanced r'- Adjustablity! features: Articulating back seat, Tilting, Sliding seat, Adjustable seat height and 1 ill lAdfuslable jf GREAT NEWS! rCwr5 1 1 Best K- Value! fi features: U. Adjustable SHE'S NOT ONLY A LOAN OFFICER, AT COAST COMMERCIAL BANK, SHE'S ALSO YOUR NEIGHBOR.

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