header banner
Default

The brilliant marketer who worked at Target and helped sell $16 billion worth of Harry Potter merchandise and films is working on a new project called Reviving Care Bears


In the fall of 1997, George Jones—chief of licensing and retail at Warner Bros.—was reading the just-published Harry Potter and the Sorcerer’s Stone, on the rapt recommendation of his London office head. “He told me this would make a great movie that could sell a lot of merchandise,” recalls Jones. A couple of chapters into the maiden adventures of J.K. Rowling’s wizard-apprentice, Jones experienced his own flash of illumination so entrancing, he could have been brandishing the “Lumos” mystical wand-cum-torch that guides Harry from darkness to glory.

“The book had sold 30,000 copies at that point,” recalls Jones. “No one from our studio, or any other studio as far as I know, had even heard of it. But we’d already had great success selling the movie heads on doing the Space Jam and Scooby-Doo films tied to product licensing campaigns, and I’m agreeing with my London lieutenant that this could be a phenomenon. I’m already imagining candy inspired by the magic beans, not to mention selling tons of Harry Potter T-shirts, capes, games, toys—you name it.”

Soon after, Jones met with Rowling and her agent at the Warner consumer products offices in downtown London. “By that time, the book was a bestseller in the U.K., but still not getting any attention from movie or merchandising people other than us,” says Jones. “Jo was reserved and quiet, but she carried a whole world in her mind. She told us she had a defined plan to write seven books, one for each year Harry spent at the Hogwarts School of Witchcraft and Wizardry.” Jones and his staff persuaded the Warner studio chiefs to clinch rights for producing films based on the first three books, and the package encompassed an exclusive deal for licensing Harry’s story, name, and image to wholesalers, who, the thinking went, would find marketing stardust in the Harry Potter brand.

The tie-up that Jones and his team heavily championed launched one of the most lucrative movie-plus-marketing twofers in showbiz history. The Wizarding World series—starting with Harry Potter and the Sorcerer’s Stone in 2001—now ranks as the fourth highest-grossing cinematic franchise ever, at nearly $10 billion, and Harry Potter–branded offerings, from clothing to cosmetics to sweets, form a mainstay of Warner Bros.’ $6 billion a year consumer products business. Jones even got to commercialize the magic candy that captivated him on that first reading, named for the wizard confectioner as Bertie Bott’s Jelly Beans.

Jones’ outfit is buying Care Bears to greatly expand its reach in merchandising and video

VIDEO: Care Bears Movie II: A New Generation (1986) - Final battle and rescue (in triumph!)
Aaron Clause

Now, Jones is reviving his playbook at Warner Bros. to revitalize the widely beloved but modestly sized Care Bears brand. On Aug. 24, IVEST—the private equity outfit that Jones cofounded—announced its purchase of Care Bears parent Cloudco Entertainment for $100 million, and now owns the collection of roly-poly, pastel-tinted cuddlies sold in the “plush” sections of Walmart and Target. The Cloudco deal fits into IVEST’s game plan of purchasing and recharging middle-market consumer goods manufacturers, licensors, and retailers. It’s a major player in a new area known as “direct transaction private investments,” or “directs.” Instead of following the Blackstone or KKR model of acquiring enterprises that they gather in a large fund of, say, 12 holdings, “direct” sponsors such as IVEST raise money from family offices that then hold the majority of shares. That template appeals to those super-wealthy clans because they can handpick deals one by one instead of owning part of a big pool containing numerous holdings they had no role in choosing.

The direct sponsors also differ from heads of the private equity giants in that they’re operating experts who play key roles in managing and setting strategy for their acquisitions. And Jones epitomizes that casting at IVEST. Today, the firm serves as general partner for three portfolio companies besides Care Bears: Dan-Dee International, the world’s largest maker of seasonal stuffed animals sold at the likes of Valentine’s Day and Christmas presentations at Walmart and Target; Paladone, a U.K. wholesaler of branded gifts from Minecraft lamps to Lord of the Rings playing cards; and Entertainment Earth, a leader in online sales of pop culture collectibles such as Batman memorabilia. For all three, the big investors are prominent family offices: Solamere (representing among others, the Mitt Romney and Scott McNealy fortunes) funded Dan-Dee; while the Landon family of the U.K. backed Paladone; and the late Sam Zell’s EGI is lead shareholder in Entertainment Earth.

At Target, Jones learned how to survive and prosper by creating a different big box

VIDEO: Barbie's Insane Marketing: Becoming a Billion Dollar Movie
TLDR Business

In all instances, IVEST bought these enterprises (at bargain prices, measured in mid-single-digit multiples of Ebitda) from families that owned and ran them. And in each case, Jones and his crew have substantially lifted sales and profitability, often by tacking on smaller acquisitions. He follows two tenets gleaned from his long career: A retailer only succeeds if it’s the customer’s far-and-away favorite place to shop certain items. And if you’re licensing a brand, you must work directly with big stores on promotions to secure shelf space, and not leave that crucial function solely to your sundry customers that make the products.

Jones learned the first rule as the second-ranking executive at Target from the early 1980s to 1991. His boss and mentor was the legendary merchant Bob Ulrich, who ran the Target chain for a quarter-century until his retirement as CEO in 2008. When the Ulrich-Jones team arrived, Target was facing a dire threat from Walmart. “Target was so vulnerable because we weren’t different enough from Walmart,” says Jones. “When they entered a market at close proximity to us, our sales would drop by 20% to 30%, and we’d get lots of pressure on margins.” The initial reaction, he says, was scrambling to match Walmart on price. “We tried to stay with them, but if you went lower, they’d keep lowering. And if you undercut them a second time, they’d lower again. The problem was that we had more expensive stores in higher-rent locations. Their infrastructure allowed them to charge lower prices, and still be profitable.”

Ulrich and Jones crafted a strategy to shadow the Walmart stickers on commodity items such as nappies and toothpaste, but make Target special by offering higher-quality branded products, starting with apparel. “The idea was that in big-box, mass merchandising, you need to differentiate, give people a reason to go to your store because it’s their first choice for, say, sportswear and fashion accessories.” They based their offerings on the kinds of trendy, splashy-colored specialties winning customers at Gap and The Limited. But instead of licensing outside brands, they developed their own custom names and designs in-house. “We launched our own brands, like Merona for women’s sportswear and Honors for casual apparel. We’d use better heavier fabrics, and raise T-shirt prices from $6.99 to $9.99.”

The gambit worked. By the late 1990s, Target had weathered the Walmart attack. “But the other big retailers from Bradlees to Gold Circle didn’t make themselves distinctive enough, and they’re almost all gone,” says Jones. The Ulrich-Jones tradition lives on. Current Target CEO Brian Cornell marshals self-made brands customers like so much that they’ll pay a little more than for the same type of top or shorts across town at Walmart.

At Warner, Jones developed a revolutionary marketing model that’s a potential game changer for Care Bears

VIDEO: Care bears the big wish movie
Bosco Rios

It was during his 1994 to 2001 stint at Warner Bros. that Jones pioneered the concept of the licensor’s taking the lead to grow its brands’ footprint in the big stores. Today, the practice falls under the bland title “retail development,” but it virtually didn’t exist when Jones hatched the offensive to expand the reach for products bearing the famous Warner characters such as Bugs Bunny and other favorites from Looney Tunes. “We saw the opportunity to combine offerings from multiple wholesalers in curated presentations, highlighting our franchises,” recounts Jones. “That would increase their sales. And the more the wholesalers sold to the big retailers, the more royalties we’d collect.”

He notes that it was his consumer products division that convinced the studio to make Space Jam, the mixture of cartoon characters and the real Michael Jordan; Scooby-Doo, blending live action and animation; and the Harry Potter series. “That sequence was highly unusual,” he says. “The studio chiefs’ head wasn’t on products but blockbusters.”

The merchandisers deployed a winning argument to move the moguls: Make Scooby-Doo, Space Jam, or a Harry Potter feature, and you’ve got two blockbusters, a monster hit at the box office, and a bonanza in the big-box stores. And that’s what happened. “We’d go to Walmart before Space Jam opened and say, Space Jam is coming; we’ll do a turnkey, eight-foot section where we sell Space Jam backpacks, toys, and apparel,” he recalls. “We’d design walls of T-shirts from multiple wholesalers showing different designs and phrases, and featuring Michael Jordan alongside various Looney Tunes characters. They pooled the greatest hits from the licensees.” He did similar promotions aligned to Batman and Scooby-Doo favorites. The wholesalers kept their space in usual sections they shared with rivals’ wares. But the collective exhibits won them an additional showcase, at no cost to themselves. The campaign helped raise consumer product sales during Jones’ seven-year reign at a 27% annual clip, from $3 billion to $7 billion.

Jones harbors big plans for Care Bears by following the old Warner strategy

VIDEO: Nasdaq Celebrates National #ShareYourCare Day with the Care Bears
Care Bears

Viewing its success at Warner Bros., rival licensors quickly turned “retail development” into an industry essential. Still, Jones sees wide latitude in deploying the strategy for greatly expanding Care Bears. American Greetings invented Care Bears in 1981 as characters proffering loving Christmas or birthday salutations on its cards. They soon evolved into video favorites, and then stuffed toys. Their message, expressed in rap lyrics that accompany their two-to three-minute videos on Netflix, YouTube, and other outlets: over-the-top optimism and the power to defrost the iciest of blobs and gremlins, expressed in the credo, “When you care to care, there’s nothing that compares.” On streaming, you’ll see the bears gamboling through pink-hued skies while declaring, “Caring is my superpower.” Shoppers warm to the decorative hearts festooning chubby toys’ paws and badged to their bellies. They’re a traditional gift for kids when leaving the hospital. The brand’s also a favorite for young girls.

American Greetings owners the Weiss family spun off Cloudco as the Care Bears proprietor in 2018. Management had already begun implementing a Warner Bros.–like strategy, but Jones plans to rev the engine by embarking on an explosive growth initiative.

“We have strong relationships with retailers where Care Bears aren’t sold now,” says Jones. Since Care Bears focuses mainly on the U.S. and U.K., Jones sees big opportunities in the EU and Australia. Cloudco’s new chairman is Mark Matheny, an IVEST operating partner who headed international consumer products under Jones at Warner. Matheny launched his own licensing company in Singapore that purchased rights to World Cup soccer and Formula 1. Jones also sees promotions that, Space Jam–like, unite products licensed by many of the 300 wholesalers. Cloudco, he reckons, could collaborate with a Walmart on collections uniting not just a rainbow galaxy of stuffed cuties but Care Bears socks, tutus, and luggage. He also envisages special pop-up displays tailored to festive occasions such as Easter and Valentine’s Day.

Jones believes that Care Bears’ comforting “love, caring, and sharing” message and appeal to youngsters could prompt the likes of airlines, sports shoe manufacturers, and fast food chains to adopt the brand. His partner Sam Bremner even foresees potential for Care Bears rides at theme parks and Care Bear–themed, “bring the kids” cruises that sell its branded merchandise onboard. 

Jones keeps fond memories from the beginnings of the Harry Potter phenomenon

VIDEO: NEW! Care Bears - Better Together - Introducing Togetherness Bear!
Care Bears

Jones related some amusing and surprising moments from his early encounters with the then little-known J.K. Rowling. “We were in a conference room in London set up for a working lunch for serve-yourself sandwiches and salads,” he recalls. “While we’re in line, one executive says to Jo, ‘I think Sean Connery would make a great Professor Dumbledore.’ Connery was then still dashing, and the part eventually went to Richard Harris, made up to look ancient. Jo shot back, ‘How did you come up with that! Have you read the book?’”

An unorthodox plotline on the publishing side caused headaches for both the moviemakers and licensing folks. “The book was published in something like 70 countries, and in each one, the publisher had control over the illustrations. Definitive images didn’t exist. Hermione and Hagrid might look one way in Italy and totally different in Brazil. No one knew what they were supposed to look like,” says Jones. The consumer products department dispatched a group of artists to Edinburgh for several days to collaborate with Rowling in creating likenesses for use in casting the film and images in branding everything from toys to games. “They worked like criminal sketch artists,” remembers Jones.

The rest is marketing history. And now he sees in Care Bears an infectious charm of its own that, given right retailing push, could spread its spell far and wide.

Subscribe to the CFO Daily newsletter to keep up with the trends, issues, and executives shaping corporate finance. Sign up for free.

Sources


Article information

Author: Paul Shea

Last Updated: 1704519604

Views: 1002

Rating: 4.5 / 5 (120 voted)

Reviews: 86% of readers found this page helpful

Author information

Name: Paul Shea

Birthday: 1939-02-16

Address: 7533 Charles Route, South Andreashire, IL 36255

Phone: +3525860373027524

Job: Article Writer

Hobby: Soccer, Web Development, Magic Tricks, Swimming, Skiing, Gardening, Amateur Radio

Introduction: My name is Paul Shea, I am a resolved, exquisite, clever, irreplaceable, vivid, talented, apt person who loves writing and wants to share my knowledge and understanding with you.