The Guardian
Copyright © The Guardian
Monday October 6, 2003

Thomas the Tank Engine fuels HIT profits hike
Owen Gibson

The addition of Thomas the Tank Engine to HIT Entertainment's stable of children's characters has helped boost annual profits at the company by 45%.

The intellectual rights group, which owns other children's characters including Bob the Builder and Barney the Dinosaur, posted a hike in annual pre-tax profits before goodwill and exceptional charges to £39.7m from £27.3m last year after buying Thomas the Tank Engine owner Gullane last year.

"While there is still some uncertainty about the strength of the general economic recovery, current trading is in line with market expectations," the firm said in a statement.

The company also revealed today that Britt Allcroft, the woman who turned Thomas the Tank Engine from a revered series of children's books into a worldwide TV hit before selling the rights to the character, had quit the board after just four months.

Ms Allcroft originally acquired film rights to the characters in the early 1980s with her former husband Angus Wright and produced hundreds of TV shows narrated by former Beatle Ringo Starr.

She was appointed to the HIT board in February, but chairman Peter Orton said she had resigned in May "due to pressure of her other business commitments".

HIT bought Gullane, Ms Allcroft's former company, last year after a protracted takeover struggle that began in 2000 when she was ousted from the day-to-day running of the company.

She was forced out in May 2000 after a big budget film version, Thomas and the Magic Railroad, which she wrote, produced and directed, flopped.

Sales from HIT's properties grew 40% to £168.9m, boosted by contributions from the Gullane properties and increasing overseas success with Bob the Builder.

Chief executive Rob Lawes said the demand for quality content from broadcasters around the world was increasing alongside the launch of new children's channels.

"Against that background HIT is now positioned as a global market leader, possessing one of the strongest portfolios of young children's content," he added.

HIT said that while Bob and friends had hit saturation point in the UK and US, revenues outside the two key territories had grown nearly 55% over the year and now represented almost a quarter of the property's revenue.

The company also plans to push Barney the dinosaur, currently screened in 142 countries, more aggressively overseas to make up for the weaker US retail market.

During the year HIT also sought to reduce its reliance on Bob the Builder and Barney by launching Rubbadubbers, a new pre-school series. It has sold the BBC2 series to Nick Jr in the US and said that broadcasters in Germany and Australia are also committed.

The company announced plans to relaunch animated favourite Pingu in the coming year and is in the process of making the first new shows since 1986. Video collections of classic episodes were also selling well, said Mr Lawes, "not only amongst the pre-school market but also amongst adults who enjoy Pingu's cult appeal".

The benefits of the acquisition of Gullane, which also brought the Guinness World of Records franchise to the company, had "exceeded expectations", said Mr Orton.

HIT made 70 redundancies and closed offices in Southampton, Canada and Los Angeles following the £137m takeover.


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