Media: When the finance people say 'That's all, folks]': A top animation company that was knocked flat by the ITV franchise changes is on the move again, says Martin Rosenbaum

Brian Cosgrove sits in his Manchester animation studios, where once 160 were employed and now there are 20, and says about the past two years: 'All of it was pretty damn bad.' But today he talks about the future with enthusiasm. In 1976, together with Mark Hall, an old friend from art school, he established what became Britain's most successful children's animation company. Seventeen years later, with both now in their late fifties, they find themselves trying to escape disaster and rebuild their achievements.

Mr Cosgrove and Mr Hall were among the innocent victims of the ITV franchise round. Their company, Cosgrove Hall Productions, had enjoyed 15 years of growth and acclaim through producing popular, high-quality drawn and model animation. Cartoon series such as Dangermouse] and Count Duckula proved money-spinning hits with children throughout the world, while adaptations of, for example, The Wind in the Willows and Roald Dahl's The BFG won prestigious international awards.

But as a Thames Television subsidiary, it struck calamity in October 1991 when Thames' franchise loss was announced. The parent company no longer had the guaranteed advertising revenue to support Cosgrove Hall between commission and payment. Work dried up during the franchise changeover period, and contraction and redundancies were inevitable. The two animators searched anxiously for new, better-resourced partners. In November, they finally announced a deal with Anglia which they hope will restore their fortunes.

'We know we can entertain people, get ratings, and make films creatively of a high standard and win awards,' says Mr Cosgrove. 'But to do it requires financial people to put money in. We have now got a business deal which works well for us and our future is much brighter.'

The deal creates a new company, Cosgrove Hall Films, 75 per cent owned by Anglia Television Entertainment, a joint venture between Anglia TV and Time Warner Entertainment. The other 25 per cent is split equally between Mr Cosgrove and Mr Hall. Anglia and Time Warner also own an international distribution company, ITEL, which will provide Cosgrove Hall with vital access to overseas markets. The staff and equipment of the Thames subsidiary have been transferred to the new firm. Thames, however, retains the lucrative rights to previous productions, which have already earned tens of millions of pounds in sales to more than 80 countries.

The future may be brighter but it is still uncertain. Under the old system, the link with Thames effectively guaranteed Cosgrove Hall transmission on the ITV network. Now the company is as dependent as other independent producers on the whims of commissioners.

'We're in a different marketplace now, and we'll only be as successful as the work we get in,' says Mr Cosgrove. The company has just finished a 26-part second series of Noddy for BBC 1 and is working on a Christmas special for this year. This follows the success of the 13-part model animation series shown in 1992 and currently being repeated - a 'politically correct' version in which golliwogs are replaced by goblins.

ITV has recommissioned the cartoon Avenger Penguins for next autumn. Cosgrove Hall is also involved with Yorkshire Television on The Day After Tomorrow, a project combining live action and drawn animation.

After that, they will be competing with everyone else for the limited commissions available. However, their reputation will help. Dawn Airey, ITV network commissioning editor for children's programmes, says: 'Cosgrove Hall has an excellent track record of producing hits, and I'm in the business of commissioning hits.' Four Cosgrove Hall ideas are on a shortlist of 30 proposals she is now considering for 1995.

However, profitability will almost certainly depend on additional sales overseas. Mr Cosgrove says: 'Under the old ITV you could virtually clear your production costs on the UK sale. I don't think that's going to be the case now. Overseas sales are going to he important in making sure you are not working at a loss. That is one reason we feel happier with a professional overseas sales structure behind us.'

As a creative artist forced to confront commercial realities, Mr Cosgrove is deeply relieved that the deal with Anglia has been concluded. 'Mark and I are film-makers. Business dealings require another breed. The in-fighting, the rough and tumble that has to go on as each party looks for the best for its own side, is not our game at all.

'We didn't think of giving up altogether, but there were many occasions when we felt we would have to go back to two men in a little office somewhere and make films as we got budgets. It was pretty frightening.'

He says that he and Mr Hall give themselves around five years before they retire. They will concentrate on running the business and developing new projects rather than actual animation. The new Anglia link should help by giving the larger company more sway within the ITV network. But Mr Cosgrove now appreciates the fragility of everything in a business determined by large forces outside their control: 'I guess it could all happen again.'

(Photograph omitted)