In Tough Times, Licensing Biz Sticks to Sure Things

The nerdy high school crooners on Fox’s surprise hit, Glee, may or may not win their regional singing contest during this week’s season finale. But one thing’s for sure: Fans will be able to get their hands on the first Glee products in time for the season 2 launch in the fall.

Glee—which is planning to affix its name to musical greeting cards and pajamas, among other items—is just one of the thousands of properties on display at this week’s Licensing International Expo 2010 in Las Vegas. It’s also part of what may be this year’s hottest industry trend: the deep dive of proven brands, from adult-targeted TV shows to restaurants and musical artists, into licensing.

The licensing push is part natural progression for media companies—magazines and other publishers are also accelerating their merchandising forays—as well as a sign of these recession-racked times. When the major source of income stagnates, property owners look for other ways to cash in.

“People are saying, I’ve created this brand equity with a loyal fan base, now how do I capitalize on it?” said Michael Stone, president and CEO of the Beanstalk Group, who represents HGTV, a network whose shows are also jumping into licensing.

Retailers, who have been hesitant to try out new products, are also more willing to stock shelves with products associated with proven brands. Licensing suffered an across-the-board 11.5 percent drop in domestic retail sales in 2009 versus 2008 to $92.5 billion, according to The Licensing Letter. Retailers were loathe to try new products, said TLL publisher Ira Mayer, and stocked their shelves judiciously.  “They kept it close to the bone and that was a change in the business,” Mayer said.

Fox’s licensing arm has signed about a dozen Glee licensees in categories ranging from games to karaoke machines. Deals will also put Glee clothing in Macy’s and accessories in Claire’s during the busy back-to-school period. In all, there will be nearly 100 products, including books, bedding and cosmetics.

“We held back in order to find the right categories, the right creative and the right retail partners,” said Robert Marick, evp of Fox Licensing and Merchandising.

New entrants also include HGTV, WE TV and its sibling, Wedding Central. The former is developing HGTV Home, which already has a Serta mattress line, and WE TV is looking for consumer goods partnerships for popular shows like Bridezillas, My Fair Wedding and Raising Sextuplets.

HGTV points to another licensing trend: all things home and hearth. Categories like kitchen goods, bedding and gardening supplies may have exploded with names like Martha Stewart, but they’re expanding rapidly with TV chefs, home-improvement gurus, stylists and interior designers.

A flood of restaurant chains including Bob Evans, Cheesecake Factory, Panera Bread, California Pizza Kitchen and even quick-service marketers like Burger King are also putting their names on products, such as frozen and ready-to-eat food. They hope to appeal to consumers cutting back on restaurant dining. The thinking, so far, is that the branded food doesn’t cannibalize the restaurants and may draw in newbies.

Wall Street is bullish on the idea, said the Beanstalk Group’s Stone, and has predicted that one such recent line, PF Chang’s frozen food—already on shelves—will quickly snag double-digit market share in the category. Panera Bread is also launching into heat-and-serve soups and other convenience products.

(In a related note, the National Basketball Association, which has suffered about a 10 percent slide in licensing sales, has charged into products like team logos on take-out pizzas, toasters and sandwich presses. The league will have its first booth this year at the Licensing Show).

Musical artists are looking at a similar strategy since the record industry continues to struggle. While celebrities of all stripes, from Cindy Crawford to chef Bobby Flay, continue to stream into licensing, they’ll have to share space with Avril Lavigne, Taylor Swift, Miley Cyrus and a host of other singer/actor/musicians who are making up for lost CD sales with fashion lines, shoes, cologne and jewelry.

That retailers have been wary of new products may also be why Warner Bros. is reviving Looney Tunes with 3-D shorts of the Road Runner and Wile E. Coyote, set to air in theaters this year; a new TV show; a partnership with Michelle Obama’s “Let’s Move” campaign; mall play areas; a mall tour; and other activities. The studio has also reintroduced the ’80s classic, ThunderCats, with a new animated show that will air on Cartoon Network next year.

Though there are some signs of economic recovery, licensing mavens said they expect to see improvement next year at the earliest.