For some in the animation business, the mention of IDT Corp. brings to mind “Star Trek’s” fearsome Borg Collective.
Indeed, IDT, a multibillion-dollar telecommunications company, has been on quite an acquisition spree, assimilating everything in its path.
Last year alone, the company acquired CG-animation house Mainframe Entertainment for $14 million, “Simpsons” animator Film Roman for $2.1 million, and homevid distributor Anchor Bay Entertainment for $60 million. IDT also purchased equity stakes in Vanguard Animation, Archie Comics Entertainment and Stan Lee’s POW! Entertainment.
In March, IDT bought 3-D animation specialist DKP Effects. And in June, IDT picked up Japanese anime house Manga Entertainment.
The size and speed of IDT’s buying spree has some animation insiders more than a little nervous, though no one seems able to say exactly why. Maybe it’s the lack of output so far from the newly minted conglom. Maybe it’s IDT’s closed-mouthed management style.
Why would a company touting unlimited long-distance care about cartoons?
Well, IDT is 10% owned by Liberty Media. But it’s not John Malone’s far-reaching influence that’s at work here, analyst say.
“The business of CG-animated films is just on fire right now,” notes one stock analyst, citing the fact that, despite having no film library, Pixar’s market capitalization rivals that of MGM. “The return rate for CG is so superior to other types of films, it makes sense to put as many of them out as you can.”
IDT seems prepared to do just that.
According to John Hyde, CEO of Film Roman and newly appointed chief operations officer of IDT Entertainment, the conglom will deliver about 2,700 minutes of finished 2-D and 3-D CGI animation next year.
“People say they’re a big company if they do one or two movies a year,” Hyde says. “I don’t think many companies in the world do 2,700 minutes.”
Announced film and TV projects include: Vanguard’s “Valiant,” which features the voices of Ewan McGregor, Ben Kingsley and Rupert Everett, and is slated for domestic distribution by Disney; the Rob Zombie-inspired “Haunted World of El Super Beasto,” which will be produced by DPS and distributed on DVD by Anchor Bay; “Spawn: The Animated Series,” a co-production with Todd McFarlane Productions; and the Mainframe-produced animated series “Popeye’s Voyage: The Quest for Pappy,” which will be distributed in the U.S. by Lions Gate.
“It’s like a jigsaw puzzle,” says Rick Mischel, CEO of Mainframe, describing IDT’s vertically integrated business model. “It doesn’t look good until it’s finished. These are the building blocks: IT, library, distribution.”
IDT officials say they have no intention of dismantling any of their new assets.
“The companies we’ve acquired all come with at least 20 years of management skills at the top,” says Morris Berger, CEO of the division that houses IDT’s new showbiz assets, IDT Entertainment. “These are people who know people in the industry and know how to vet products.”
Including Hyde, IDT Entertainment’s senior management is made up of the top execs of the acquired companies.
As for the Borg-like swiftness to all of this, well, Berger says the company simply chose to buy rather than build.
“One was a very slow growth (strategy) and developing our own capacities. And the second way was to look for excellently managed companies that didn’t have the cash to take it to the next level. ”
It’s IDT’s deep pockets — record quarterly revenue of late, $1 billion in the bank and no debt — and diverse portfolio that allow its divisions to develop properties and ride out the inevitable flops, Berger says.
“We have a nice, steady business of service work and video distribution,” Berger says.
And then there’s the company’s network infrastructure — handy when trying to link up CG houses and their clients.
IDT’s Digital Production Solutions (DPS) venture, which connects the company’s inhouse animation houses with independent shops around the world over a secure network, provides animation services for third-party clients on projects large and small.
Berger boasts that IDT’s network software gives clients the ability to view animation being created by vendor shops in real time, as it’s being made. “It gives tremendous fiscal and creative authority,” he says.
Berger admits that IDT is pondering another application: online videogaming. “It’s not something we’re today focused on,” he says. “(But) it just seems like the big publishers, the EAs of the world, make all the money, and the guys who do the work are all starving.
“We’re an opportunistic company, and we keep our eyes open.”