From securitizing pop music to branding the millennium, over the past year businesses have come up with many innovative methods of making the most of their IP. MIP has chosen the most interesting deals from 1998 with a significant IP element. They are not necessarily the biggest deals of their type or in their industry. But by speaking to those who worked on the transactions, we highlight the IP challenges, such as ownership, valuation, technology transfer and validity, which confronted the participants.
We have selected our favourites, but many other deals could have made the final list. Look at Boston Scientific. It leapt to the front of the invasive medicine technology market through the acquisition of important patents in a $2.1 billion takeover of Schneider Worldwide. The billion-dollar merchandising drive for the World Cup in France also deserved a place.
The sale of the rights to repeats of Seinfeld, Bayer's acquisition of Chiron's diagnostic division, British Sky Broadcasting's bid to buy Manchester Utd IP figured in them all. They show how owners are striving to make the most of their rights.
Who knows what kind of deals we will be talking about next year? But you can be sure the Star Wars movie will be one of them. Expect Anakin Skywalker mugs, T-shirts, caps, dolls and just about anything else you can slap a logo on. Months before its first showing, the film is already sure to be the biggest film of the year. 1999 looks set to be a great year for Twentieth-Century Fox.
Deals of the Year will be an annual feature in MIP. We hope it will provide a valuable, yearly insight into how organizations and their advisers handle the intellectual property issues in all kinds of transactions.
Trade marks
Rolls-Royce
Class distinction
Until Volkswagen steamed in with a $715 million bid to buy Rolls-Royce Motor Cars in March last year, Munich-based rival BMW thought it had the deal in the bag. As engine supplier to the prestigious motor company and business partner of aircraft engine maker Rolls-Royce Plc the owner of the Rolls-Royce trade mark (see box) BMW's negotiating position appeared strong.
The first major obstacle persuading Rolls-Royce Plc to sell the trade mark for the car had been overcome. It goes back to the end of 1995, explains Martin Hann, an IP lawyer with Norton Rose who worked on the deal for BMW, when we first received memoranda telling us why the Rolls-Royce trade mark could not be split.
Production line starts rolling
Since Sir Henry Royce and the Honourable Charles Rolls got together to make automobiles in the first decade of this century, their names have been held in high regard. Splitting ownership of the world famous brand between the aircraft engine maker and the car company was not to be undertaken lightly. There was a long and painful discussion, says Hann. One had to be sensitive in approaching it. The risk that the trade mark could be damaged or even, in the worst possible case, struck off the register meant that negotiations were slow and careful. From an academic point of view, says Nick Carter, a partner of Freshfields who represented Rolls-Royce Plc, it is undoubtedly better if a trade mark is kept in a single portfolio. Unless it is handled extremely carefully and sensible processes and controls are put in place, you run the risk of the mark being worth less in the hands of the two proprietors.
BMW, of course, was in no doubt that it could be trusted with the trade mark. BMW is one of the brands with the highest images in the world, says Juerg Dinner, a spokesman for the Munich company. Developing brand image and values is one of our core competencies.
Supply chains
By the end of 1997, Rolls-Royce Plc agreed that the Rolls-Royce trade mark could, in principle, be split. There is no doubt, says Nick Carter, BMW has established its credibility in maintaining and protecting brands and it was an appropriate party that could be trusted. Whether any one else would fall into that frame is a good question. Last March it looked as though that question would be put to the test, as Volkswagen made a bid for the motor company that trumped BMW by over $200 million. Having shown itself willing to pay so much for the car business, VW appeared likely to keep raising its bid for the trade mark until BMW folded. The question remained, however, would Rolls-Royce Plc sell the most prestigious brand in the world at any price to the makers of the People's Car?
We will never know. BMW, supplier of engines for the Rolls-Royce Silver Seraph and the Bentley Arnage, played its ace. Unless VW backed away from the trade mark deal, BMW threatened to terminate its engine supply contract for the Seraph and the Arnage as early as July 1999. Rumours that Volkswagen had found an alternative engine supplier proved unfounded, and BMW snapped up the Rolls-Royce trade mark for $66 million.
Pitching for business
Under a deal thrashed out on a Bavarian golf course last July, BMW promised to continue supplying engines for at least four years and granted a free licence to VW to use the Rolls-Royce name. At the Motor Company factory in Crewe, Volkswagen will produce Bentleys which accounts for about 70% of production and Rolls-Royces until 2003, when the name plus other Rolls-Royce emblems, including the Silver Seraph and the Spirit of Ecstasy mascot, will pass to BMW. As for the future of the luxury brand itself, BMW's Juerg Dinner refused to comment, except to say: It will be developed further and strengthened. The company says it has already worked out a strategy for the brand, but declined to reveal how the Rolls-Royce image will change. Rolls-Royce salesman Jason James of Broughtons in Bristol is equally in the dark. We do not get told that, really, he says, but I think it is going to be slightly more sporty. Sir Henry and the Honourable Charles would be delighted.
Tech transfer
Sun Microsystems/Oracle Corporation
Having it every way
Barter is not the word that comes naturally to executives in the information technology world. Rapid change in the industry means any little advantage a company can eke out has to be turned into profit. But barter is the word John McFarlane, president of Solaris Software, a division of Sun Microsystems, uses to describe December's non-exclusive, technology exchange agreement between Sun and Oracle Corporation.
Boosting the Internet
And the word is apt. No money changed hands. Sun has licensed its Solaris operating system to Oracle to embed it in its 8i Internet database. Oracle has licensed 8i to Sun to combine it with Solaris to increase the volume of its Internet business applications such as email, calendaring and system management. These functions are called middleware. Solaris is the leading platform for Unix, the most successful operating system used in workstations. It was a real opportunity to leverage technology to the advantage of both companies, says McFarlane. We did an evaluation of our Internet needs and saw that we needed enriched middleware. Oracle needed an embedded operating system for their database.
Well I never
It is almost unheard of that two companies would exchange their crown jewels like this, says one computer industry observer, who did not want to be identified. It's as if Procter & Gamble gave away the formula to one of its products. IP issues
The agreement took nine months to negotiate because of the time needed to work out the licensing and intellectual property implications. At Sun we take pains to ensure we own the IP, says McFarlane. Internal licensing teams handled the talks for both sides. A number of conditions attach to the agreement. Each company must protect the technology they receive from the other, the technology can only be used in embedded products and each has to right to modify it.
No matter how separate any alliance might appear to be, the shadow of Microsoft inevitably looms over any computer industry discussion. But McFarlane is adamant that the Sun-Oracle deal, one of a series the two companies have concluded over the years, has nothing to do with an anti-Microsoft strategy: This allows us to compete with many vendors. We are trying to adopt an Internet mentality and to improve our systems.
The Oracle deal complements Sun's three-year, strategic development pact with America Online, the Internet service provider, as part of that company's takeover of Netscape Communications, the Internet browser developer. As part of the deal, Sun will pay AOL $350 million in licensing, marketing and advertising fees in return for access to its technology.
Branding
Prison Blues
Stitched up
You stop short when you spot the electric chair. And then the advertisement roars out: Sometimes our jeans last longer than the guys who make them. Tasteless? Sure. It may represent the way-out mind of a sick advertising copywriter, but the advertisement is really trying to sell you a pair of trousers. They are not any old pair of trousers, however. They are jeans made by the inmates of the Eastern Oregon Correctional Institute (EOCI) in Pendleton, Oregon. That is a grandiose title for a prison. The jeans and other clothes, such as shirts, shorts and jackets, are sold in more than 600 shops in the US, Europe and Japan.
The prisoners work for the Prison Blues company. They make the garments as part of a joint licensing agreement between the Prison Blues company, the State of Oregon and the Array Corporation, a privately-owned business based in Portland. Under the existing agreement Array pays 7% of sales to Prison Blues to use the trade mark, the only one which the company owns.
Prison Blues was started in 1990 on the back of an idea from the director of the Department of Corrections for Oregon, who thought of the scheme as a way to provide prisoners with worthwhile work, skills and the chance to earn some money. A grant to start the business came from the proceeds of drug deals and stolen property.
About 60 inmates man the production line at a factory within the prison. The average worker earns $6.75 an hour. The money goes towards compensating the prisoners' victims and supporting their families. They can keep about $30 a week to spend. The rest goes into a savings account to be accessed on their release. The prisoners usually leave with about $10,000. No other such scheme exists in the rest of America.
In its best year its income reached $2 million but the State of Oregon owned the company then. Tawna Jones-Cliff, vice president of the Array Corporation, declined to give up-to-date financial information about the company. Array has no plans now to produce anything other than clothes.
The prisoners spend an average term of 18 months at the prison, but their leaving has nothing to do with the electric chair. That is an advertising ruse. Murderers, drug dealers and rapists form part of the workforce, but none are on Death Row. The Eastern Oregon Correctional Institute is a medium-security prison.
TV rights
NFL
Betting the ranch
What a difference a year makes. When television network CBS muscled its way back into football with a $4 billion, eight-year deal to broadcast games, both sports and media commentators predicted trouble.
The January 1998 deal blasted rival network NBC out of the running to televise AFC matches. Having held the rights for the past four years, NBC had first refusal to renew its contract. Deciding CBS' $500 million a year bid was too rich for its blood, however, top-rated NBC backed away and the rights were lost.
There was no way, NBC sports president Dick Ebersol told the press, we were going to get into this. We are not in the business of putting the livelihood of our employees in jeopardy. Instead, NBC snapped up popular shows ER and Seinfeld, and negotiated a new contract with the NBA to show basketball fixtures.
Pundits muttered darkly about breakaway football leagues, player strikes, and rising ticket prices and cable subscriptions. Much media attention focused on whether CBS and the other networks which bought NFL rights packages Fox, ABC and ESPN - could hope to make money on their combined investment of $18 billion. Basketball, said some, would be promoted as a rival to football.
Crisis? What crisis?
Now, of course, most analysts have trouble remembering what all the fuss was about. It seems, says Michael Bednarek, a partner of Crowell & Moring in Washington, DC, that you cannot pay too much for some of these rights. CBS has turned around. NBC have been left high and dry they have been the premier network for quite a while and they have really slipped. Last year, CBS topped the crucial autumn ratings table for the first time since well, since they last held the rights to broadcast football games. The strike by basketball players which all but wiped out the entire season has helped CBS, but the football deal owes much of its success to careful management of the NFL over the past 30 years. Michael Bednarek comments: The thing that has really characterized the NFL is their ability to work together and build a product that is really well packaged for TV.
Counting chickens
Whether the networks and football will both thrive in the longer term remains to be seen. Already, however, the value of football franchises is rising the Cleveland Browns and the Washington Redskins have been sold for record sums since the TV rights deal was completed. The deal, which includes provisions for new technologies such as digital TV and Internet broadcasting, will serve as a lesson for future rights negotiations. An NFL source, who prefers not to be named, says: The degree of thought that went into trying to identify these types of issues will have an influence on other sports. I can tell you that baseball is going to want to ask us about a lot of the things that we have considered. They know how much we put into it.
Once the executives had come to an arrangement, the NFL's vice president of law Frank Hawkins and a team from Washington, DC firm Covington & Burling, led by partner Michael Cutler, were tasked with putting it all in writing. The firm has represented the NFL for about 30 years. NFL commissioner Paul Tagliabue is a former partner of the firm.
For now, the league is reluctant to reveal exactly how the contract allows for new technologies. The source added: We are in the first year of an eight-year deal, and a lot of the technology is just starting to be brought out. In eight years it is going to be vastly different. Have the prophets of doom who said the deal was too big been proved wrong? That is for the networks to say, he says, but CBS is probably pretty happy right now.
Merger
Astra/Zeneca
Open wide and swallow
December was the month for the medicine men. Three deals in quick succession shook up the European pharmaceutical industry. Hoechst and Rhone Poulenc announced plans to create a new company called Aventis; Sanofi and Synthelabo, the leaders of France's pharmaceutical industry, agreed to come together; but the alliance activity was topped by the $70 billion merger between Zeneca from the UK and Astra, the Swedish drug maker. AstraZeneca will be the third biggest pharmaceutical business in the world and the second largest in Europe. It will be the continent's biggest industrial merger.
Astra and Zeneca are merging to protect themselves from the patent expiries of some of their best-selling drugs. The company will make some of the world's leading medicines, including Losec, the anti-ulcer drug, and Zestril, the heart treatment. But by the end of 2002, these two plus two other drugs will have lost their US protection [see table]. Losec, the world's best-selling medication, accounted for almost half of Astra's 1997 sales.
Win some, lose some
Jonas Morner, European pharmaceutical analyst at Deutsche Morgan Grenfell, the London investment bank, predicts that Zeneca's earnings will increase by at least 10% each year up to 2001, making it among the top performers in the industry. However, earnings will fall by 5% in the year after the patent expiry of Zestril, though he expects the company's revenues to recover in 2003. His forecast for Astra's losses after Losec's loss of patent protection is more pessimistic: Something in the order of 15%. The benefits for Zeneca come in the access it will get to Astra's stronger drugs pipeline and in the cost savings the company can achieve to pay for that research and development. AstraZeneca will have 55 new chemical entities in its R & D pipeline including six at phase three or registration stage. Among these are Faslodex for treating advanced breast cancer, Budoxis for asthma and Zendra for treating strokes. The deal is good for Astra too, says Jonas Morner: There were worries about how it would cope after the patent expiry of Losec. Now it will be part of a bigger, stronger competitive entity.
Snags
The deal is not perfect. A cross-border merger is more difficult. You might expect more cost savings from a deal between companies in the same country, says Michael King, a pharmaceutical analyst in the London office of French bank SG. Speculation surrounds a counterbid for Zeneca from Glaxo Wellcome but King thinks this is unlikely: The Glaxo Wellcome alliance is not long completed and there was some political fallout both internally and externally from that. Anyway, this is an important year for Glaxo with a number of products hitting the market. Dr Steve Smith heads Zeneca's IP group. The company has retained the law firms of Freshfields in London, Davis Polk Wardwell in New York and Mannheimer Swartling in Sweden. Working for Astra are the Swedish firm Vinge, Slaughter and May from London and the New York firm of Winthrop, Stimson, Putnam & Roberts.
Neither Astra nor Zeneca should look back to 1998 for tips on how to merge successfully. Dealmaking was not the pharmaceutical industry's strong point last year. The UK alliance of Glaxo Wellcome and SmithKline Beecham failed to go through, and US companies American Home Products and Monsanto, also called off merger talks.
Securitization
Formula One Holdings
Hard sell
The lure of the financial markets proved irresistible to Bernie Ecclestone in 1998. But so far the attraction has not been mutual. In September, the Formula One (F1) motor racing boss announced plans to raise $2 billion from a eurobond issue. The five-year floating rate note is to be backed by intellectual property attached to the F1 World Championship, principally broadcasting rights. The money is expected to go to Ecclestone's family trust.
But by early 1999, the bond still hadn't been launched. Morgan Stanley, its lead manager, has been unwilling to say when it might be. Ecclestone went ahead with his announcement even though the EC was still investigating his acquisition and exploitation of various rights associated with the World Championship, particularly the broadcasting rights. The Commission disputed Ecclestone's statement that only a few minor issues remained to be cleared up between them. In 1997, Ecclestone shelved a plan to float his company Formula One Holdings, which promotes and markets the World Championship, on the London Stock Exchange.
The motor racing chief is hoping to follow successful securitizations in 1997 and 1998 which raised money for entertainment and sports organizations such as Dreamworks film studio and Real Madrid football club. Investors were alerted to the potential of IP asset-backed securitizations following David Bowie's revolutionary deal in February 1997 when the rock star raised $55 million on the back of future revenues from his back catalogue. Asset-backed securitization backed by mortgage or credit card income has long been a popular method for companies to raise finance.
David Pullman, the New York financier who organized the Bowie transaction, has proved to have the key to IP securitization. In 1998, he concluded three more deals involving music royalty securitization.
In November, Nickolas Ashford and Valerie Simpson, the songwriters responsible for such hits as Solid and Ain't No Mountain High Enough, raised at least $10 million from bonds backed by the royalties from about 250 musical compositions. Ashford and Simpson, who have had their songs recorded by stars such as Whitney Houston, Diana Ross and Ray Charles. In August, Pullman concluded a similar deal worth an estimated $30 million with Holland Dozier Holland, the Motown songwriting team.
The other bond issue announced by Pullman during November featured the work of songwriter Duane Hitchins in a multi-million dollar deal. His songs have been recorded by Rod Stewart, Kim Carnes and Tupac Shakur.
This technique has proved not to be entirely successful for every finance house in the IP asset-backed securitization market. In fact, it has proved to be disastrous for the San Francisco-based Capital Company of America. The company organized a $15.2 million securitized loan for Rod Stewart in April 1998.
But now its parent company, Nomura Securities, has closed the entire securitization unit. Capital Company is believed to have suffered losses of more than $700 million since the collapse of the money markets in the autumn.
Acquisition
Abbott/Murex
Testing times
From any perspective, the $234 million purchase of biotechnology company Murex Technologies by Abbott Laboratories looked a handsome deal for Murex. The acquisition, agreed in March 1998, priced Murex at more than double its 1997 sales of $106 million, or $13 a share. Considering that less than two years earlier the shares were being traded at 11 cents each, the sale price was remarkable. One of Murex's lawyers, Hammond Suddards partner Marija Danilunas, who has represented the Canadian company since the dark days of 1995, says: It looked like all was lost for Murex, so I think it was a tremendous success.
Court room drama
Murex was already embroiled in worldwide patent litigation with Chiron over a hepatitis C patent when Danilunas took on the case. Chiron had also launched infringement suits against other biotech companies, including Medeva and Biogen. Danilunas went with colleague Larry Cohen to pitch for the Murex work in April 1995. We took it on when Murex was not winning, put it that way, she says. It was 18 months of intense war between the parties. Things got off to a shaky start when Chiron's law firm, Bristows, immediately launched an injunction against Cohen, a former Bristows partner, for conflict of interest. I did not have the time to leisurely get to know the file, says Danilunas.
In July 1996 events took a turn for the worse for Murex when Chiron won the suit. Crucially, however, the parties settled out of court and Murex was able to continue working in the hepatitis C field. With the law suits out of the way, the Murex's share price began to climb once more. The settlement probably opened the door for the Abbott purchase, says Danilunas.
Poacher turned game keeper
On July 2 1996, Murex announced its own patent infringement suit against Abbott Laboratories, alleging that two systems, the IMx and AxSYM diagnostic systems, violated Murex patents. Reports suggested that damages would be in excess of $100 million. When Abbott lost a summary judgment in Autumn 1997, it looked as though the case would come to a jury trial. Last March's acquisition of Murex settled the patent infringement suit, though Abbott denied this influenced its decision to go ahead with the purchase. Abbott spokesperson Rhonda Luniak says: We were getting access to tests that complement our own probe technology and products that broaden our own portfolio in HIV testing.
As well as acquiring Murex's patent portfolio, Abbott has also gained access to a number of technologies for which Murex had exclusive marketing and distribution deals. These include technologies owned by Digene and Innogenetics. Murex's patents will give Abbott the rights to all diagnostic tests related to the aids drug AZT.
Merchandising
The Millennium
Night of one thousand marks
When it comes to marketing, it seems millennium is the magic word. In Symington, west Scotland, the Airedale Terrier Millennium Committee is hard at work mailing pewter lapel badges to fans of the pedigree dog.
The $6 badges, which feature the head of an Airedale terrier entwined with the number 2000, are selling well. It is absolutely brilliant, says Committee spokesperson Carolyn Thomson. They are selling like hot cakes. The big sales drive will come at this year's June dog show (T-shirts also available), for which Airedale lovers have already booked out three local hotels.
One name fits all
For promoting everything from Airedales to air fresheners, millennium brands including Year 2000 and Y2K are this year's hot properties. When it comes to trade marks, however, the field is becoming a little crowded. According to research carried out by Philadelphia law firm Dechert Price & Rhoads, the US Patent and Trade Mark Office has more than 2,500 pending applications and registrations for marks containing the number 2000, and over 1000 for marks containing the word millennium and its variants. Some of the registrants are well-known companies seizing on a once-in-a-thousand-years marketing opportunity: Miller Brewing Company, for example, claims to be the Official Sponsor of the Millennium; adult entertainment company Playboy has registered Playboy: The Official World Wide Brand of the Millennium.
It's official, folks
There are an Official Chicken, an Official Light Bulb, an Official Air Freshener and even an Official Patent Attorney of the New Millennium. Call it Millennium Madness or Millennium Mania, but have a lawyer handy if you do both of these expressions have already been registered as trade marks in the US. Other enterprising souls register their millennium mark first and find products to attach to it later. Not far from the meridian line at Greenwich in south east London, Richard Ayers, proprietor of Millennium Incentives, is preparing a range of merchandise everything from champagne and countdown clocks to tea towels and time capsules. I formed the company about six months ago to cash in, he says. It sounds a bit vulgar I know, but this millennium opportunity seemed too good to miss.
Millennium marks, however, may not prove to be the money-spinners everyone thought. The problem now, says Janice Riley, Products Development Manager of Auckland merchandising company Pride New Zealand 2000, is that everyone is in the same situation, as far as I can make out. All the companies that we have spoken to on the Net are trying to license their trade marks.
If Riley's registered marks Daybreak 2000 and First Reflected Light are infringed, she admits there may not be much she can do.
As a small company, we do not have the endless funds that the big corporates have for solicitor fees, so we will have to wait and see when the time comes.
Class act
Even bigger companies may struggle to protect their millennium marks. A lot of them are highly descriptive, bordering on generic, says Darren Cahr of Chicago firm Rudnick & Wolfe. Class of 2000, for example, which has been registered by a Californian, will be much in demand from school and college leavers, but controlling its use could be difficult. Class of 2000 is probably one of the marks that is going to be very minimally protectable, says Cahr.
Mark Mitten, president of the Billennium Organizing Committee and one of Cahr's clients, thinks he has found a solution avoid the word millennium altogether. He registered his marks, including Billennium, in the early 90s. It was obvious to us early on that the term millennium was going to become generic and undistinctive. Millennium can mean a load of different things.
The beauty of Billennium, says Mitten, is that it fits the criteria for being a good trade mark. His lawyer adds: Billennium is one of the few marks that is instantly recognizable and defendable. We are more than willing to do whatever it takes to defend the mark.
The Billennium Organizing Committee has had to defend its mark just once from a company in Philadelphia which was using the mark for millennium bug software though another of its marks was opposed. The International Olympic Committee demanded reassurances that The Billennium The Official Celebration of the Year 2000 would not be used for sporting events.
Often, millennium marketeers start opposition proceedings just to find out what the competition are up to. Mitten declined to reveal exactly what he planned to do with his trade marks for fear that other millennium entrepreneurs would steal his concepts. People are so hot for millennium ideas, he says.
Sometimes, registering a trade mark is the easy part. Knowing what to do with it can be much harder.
Licensing
Donna Karan International
Tailored agreements
John Idol started a revolution when he took over as chief executive of Donna Karan International in September 1997. He set about removing the company from the manufacturing and distribution chain and started a campaign to exploit its brands through strategic licensing. Idol's vigorous promotion of the company's principal brands, Donna Karan and DKNY, a cheaper, more casual version of the Donna Karan label, since 1997 has seen the company agree deals with companies such as Estee Lauder, Liz Claiborne, Esprit and Hanes.
The company's beauty division was closed and in September 1997, Estee Lauder was granted the exclusive worldwide rights to the Donna Karan New York and DKNY trade marks to make, market, distribute and sell beauty products.
Jeans deal
Three months later, the company concluded a deal with Liz Claiborne, the American clothes retailer, for the exclusive rights to the DKNY Jeans and DKNY Active trade marks and the rights to the DKNY Jeans and DKNY Active collections in the western hemisphere. The new jeans collection was launched in spring 1998. The new Active collection is due in the shops in spring 1999.
Neither a representative of Donna Karan International nor Liz Claiborne wanted to comment on the deal, but the royalties due are thought to be similar to a previous licensing deal with Designer Holdings where Donna Karan International received 7% of sales.
In February 1998, Wacoal America, the underwear market leader in America, which has produced the Donna Karan Intimates range since 1992, agreed another licensing deal with Donna Karan International to develop men's and women's DKNY underwear collections. The deal includes sleepwear and loungewear ranges in north America and Europe. Wacoal is also responsible for a multi-million dollar advertising and marketing campaign to back the launch of the clothes.
New strategy
The company's licensing activity is part of a strategic business plan Idol announced at the end of 1997. Idol plans to exploit the brand through more licensing deals with world-class companies and the opening of both DKNY stores in America, including one on Madison Avenue in New York, and licensed stores in the rest of the world. Idol's reorganization, which included sacking staff and cutting the company's divisions from 13 to six, was a response to the poor performance of the company's shares since they were listed on the New York Stock Exchange in June 1996. They reached $28 on their first day, but had slumped to $7 in early January 1999 despite Idol's action. The company suffered from a lack of discipline in managing expenses before Idol arrived, says Brenda Gall, apparel and footwear analyst with Merrill Lynch in New York. It took on too many projects such as keeping fragrances in-house. The marketing dollars on that are so huge.
Licensing is definitely a good strategy. The company's licensing programme had been underdeveloped, she says. Some things you can do internally, but there are others which you shouldn't.
Gall expects licensing revenue to have reached between $17 million and $18 million in 1998, and to increase to between $30 million and $31 million this year.
