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Financial Crisis
Lazytown children's television show becomes latest victim of Iceland's financial crisis
Sportacus, Iceland's answer to Superman, is the latest victim of the country's financial crisis after being forced to restructure the media empire behind his LazyTown show.
By Sarah Butler 9:17PM BST 31 May 2010
Magnus Scheving, chief executive and star of the LazyTown children's TV show which is screened on CBeebies in the UK, has had to hand over the intellectual property rights to his creation in return for a 40pc stake in the media company he founded. Icelandic banks Landsbanki and Islandsbanki are at the head of a group of debt holders who now control LazyTown after it was forced to refinance more than $34m (£23m) in debt.
More 30 bondholders, who were together owed $22m by LazyTown, have taken a massive discount on their claim in return for a 31pc total stake in the business. Landsbanki, which was owed about $12m on a loan due to expire next year, has taken a 12pc stake and provided a new $2.4m loan.
Other shareholders including Jon Asgeir Johannesson, the head of collapsed investment firm Baugur which once owned a strip of the UK high street including Oasis and Karen Millen, have seen their investments virtually wiped out. Scheving and his wife were only able to retain their stake in LazyTown by handing over the intellectual property rights which they previously held in a separate company.
Reports by KPMG and others into LazyTown, which helped form the basis of the restructure valued the company at less than half the $80m estimated value in 2007. However, Sigurdur Stefánsson, finance director of LazyTown, says this is no longer an accurate reflection of the current valuation of the company, which moved into profit in 2009.
In 2008, the company achieved revenues of $11.4m but made a loss of $6m or $837,000 before tax, depreciation and amortisation (EBITDA). Last year it achieved EBITDA of $2.1m despite the global recession.
In a statement, LazyTown said that after the restructuring there are no repayments of loans in the next two years, which "leaves the company in a great position for future growth".
Lazytown's TV show has been sold into 128 countries worldwide but has struggled to realise the potential from licensing deals, where the real money in children's TV is made.
That's mainly because, after a dispute with Nickelodeon, the TV channel which shows its programme in the US, LazyTown is unable to cash in on licensing deals in that country, the most lucrative market for children's merchandise, until 2011.
One well-informed source said: "The problem was that revenue was not delivering. My view is that the biggest problem with the company is that Scheving thinks himself the best at everything. He even thinks he knows how to make toys better than Fisher-Price."
Stefánsson said that the company was planning major growth in the US, where it is able to sell merchandise next year. Scheving said: "We're excited to continue leveraging the opportunities being presented to the brand, while contributing to-wards a healthier new generation of young people."
Scheving, one of Iceland's many risk-loving entrepreneurs, became a healthy-living guru after winning a bet with a friend by becoming the European aerobics champion. He launched books and a live show before selling the idea for a TV show to Viacom, owner of Nickelodeon. That deal helped Scheving gather a group of investors who put up a reported $42m to build a state-of-the-art TV studio in Iceland and spend four years filming the show's 52 episodes. The studio has such spectacular CGI kit that even Quentin Tarantino has been over for a look around.
Lazytown children's television show becomes latest victim of Iceland's financial crisis
Sportacus, Iceland's answer to Superman, is the latest victim of the country's financial crisis after being forced to restructure the media empire behind his LazyTown show.
By Sarah Butler 9:17PM BST 31 May 2010
Magnus Scheving, chief executive and star of the LazyTown children's TV show which is screened on CBeebies in the UK, has had to hand over the intellectual property rights to his creation in return for a 40pc stake in the media company he founded. Icelandic banks Landsbanki and Islandsbanki are at the head of a group of debt holders who now control LazyTown after it was forced to refinance more than $34m (£23m) in debt.
More 30 bondholders, who were together owed $22m by LazyTown, have taken a massive discount on their claim in return for a 31pc total stake in the business. Landsbanki, which was owed about $12m on a loan due to expire next year, has taken a 12pc stake and provided a new $2.4m loan.
Other shareholders including Jon Asgeir Johannesson, the head of collapsed investment firm Baugur which once owned a strip of the UK high street including Oasis and Karen Millen, have seen their investments virtually wiped out. Scheving and his wife were only able to retain their stake in LazyTown by handing over the intellectual property rights which they previously held in a separate company.
Reports by KPMG and others into LazyTown, which helped form the basis of the restructure valued the company at less than half the $80m estimated value in 2007. However, Sigurdur Stefánsson, finance director of LazyTown, says this is no longer an accurate reflection of the current valuation of the company, which moved into profit in 2009.
In 2008, the company achieved revenues of $11.4m but made a loss of $6m or $837,000 before tax, depreciation and amortisation (EBITDA). Last year it achieved EBITDA of $2.1m despite the global recession.
In a statement, LazyTown said that after the restructuring there are no repayments of loans in the next two years, which "leaves the company in a great position for future growth".
Lazytown's TV show has been sold into 128 countries worldwide but has struggled to realise the potential from licensing deals, where the real money in children's TV is made.
That's mainly because, after a dispute with Nickelodeon, the TV channel which shows its programme in the US, LazyTown is unable to cash in on licensing deals in that country, the most lucrative market for children's merchandise, until 2011.
One well-informed source said: "The problem was that revenue was not delivering. My view is that the biggest problem with the company is that Scheving thinks himself the best at everything. He even thinks he knows how to make toys better than Fisher-Price."
Stefánsson said that the company was planning major growth in the US, where it is able to sell merchandise next year. Scheving said: "We're excited to continue leveraging the opportunities being presented to the brand, while contributing to-wards a healthier new generation of young people."
Scheving, one of Iceland's many risk-loving entrepreneurs, became a healthy-living guru after winning a bet with a friend by becoming the European aerobics champion. He launched books and a live show before selling the idea for a TV show to Viacom, owner of Nickelodeon. That deal helped Scheving gather a group of investors who put up a reported $42m to build a state-of-the-art TV studio in Iceland and spend four years filming the show's 52 episodes. The studio has such spectacular CGI kit that even Quentin Tarantino has been over for a look around.
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