Big Itsy Bitsy deal

Handleman buys 75% stake in 'Teletubbies' licensee

NEW YORK — “Teletubbies” and “Tots TV” were thrust into the same licensing pen as the original “Halloween” and “Godzilla” Monday when Handleman Co. bought 75% of Itsy Bitsy Entertainment for an unspecified amount that could exceed $100 million.

Handleman, a leading rackjobber based in Troy, Mich., said it would keep Itsy Bitsy’s management — headed by CEO Kenn Viselman — but merge the holder of such kiddie properties as “Noddy” and “Miss Spider,” as well as smash U.K. import “Teletubbies,” into its wholly owned North Coast Entertainment division.

The deal also calls for Itsy Bitsy Entertainment to establish a unit to acquire, develop and market new children properties and concepts for North Coast Entertainment.

“This just shows how creative Handleman can be in finding ways to participate in high-demand licensing properties,” said Barry Sosnick, a New York-based analyst for Genesis Merchant Group Securities.

Neither party would provide financial details, but estimates call for Itsy Bitsy’s currently hot properties to throw off between $30 million and $35 million in cash this year.

Handleman is expected to aggressively re-invest much of this cash flow in other licensing properties, either directly through competitive bids or indirectly through the acquisition of license holders.

Viselman, Itsy Bitsy’s founder and visionary, previously worked with North Coast subsidiary Anchor Bay on “Tots TV,” another series from “Teletubbies” creators Ragdoll Prods. And, before forming Itsy Bitsy in 1995, he helped establish the video label for “Thomas the Tank Engine,” to which Anchor Bay hold video rights.

Handleman is a leading manager of music inventories for such retail clients as Kmart and Wal-Mart. It has major markets in Mexico and Canada. It also has footholds in Argentina and Brazil.

Its North Coast Entertainment division develops, publishes and markets family entertainment and education multimedia products through Madacy Entertainment, Sofsource and Sell-Through Entertainment, in addition to Anchor Bay.

Handleman’s sales for the year ended March 31 hit $1 billion, while its stock rose 5% on news of its Itsy Bitsy majority stake, closing Monday at $11.75.