Birth of a Nickelodeon Nation

He’s a sweet-natured marine invertebrate named SpongeBob SquarePants who wears, well, you know. And if he looks oddly symmetrical for a sea creature, suspiciously similar to something you might find in your supermarket cleaning supplies aisle, it’s just that at Nickelodeon, it’s hip to be square. “I drew a rectangular sponge and I thought, ‘This is the most absurd thing possible for someone to want to make a TV series out of,’ ” says SpongeBob’s creator, Steve Hillenburg. “And that’s kind of how he was born.”

At the moment, Hillenburg is in his own natural habitat, a cluttered office in Nickelodeon’s cartoony warren of animators in Burbank. It’s a weird kind of alternate universe, where humans look out of place and the curving, colorful walls could be a backdrop for such Nicktoons as “The Angry Beavers” or “CatDog,” which stars a half-feline, half-canine character whose two heads are forever conflicted by existential identity issues.

What? You think being ridiculous is an impediment to financial success? Better bone up on the new math, at least when it comes to children’s entertainment. Driven in large part by sheer silliness, Nickelodeon has snatched supremacy in children’s commercial television from the jaws of the competition. And the company is no longer tube-bound. Two years ago, the network’s first animated feature film, “The Rugrats Movie,” broke a key opening day moneymaking barrier. This year’s low-budget, live-action “Snow Day” is also plowing profit into the company. Soon CatDog or SpongeBob may also use their Nielsen ratings as a springboard onto the big screen, as the edgy little $1-billion cable company nips ever more aggressively at Disney as a force in feature films.

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Nickelodeon is no overnight success. started in 1979 by a Warner offshoot, the network was initially commercial-free and loaded, insiders have said, with the sort of “green vegetable programming” that might have been very good for kids if only they had watched. A former teacher named Geraldine Laybourne joined the network and took it commercial. Shows such as “You Can’t Do That on Television” and “Double Dare”--whose trademark shtick was to dump vats of green slime on young participants--created a tone of kid-centric iconoclasm that has marked the network’s course since.

In 1996, Laybourne left to oversee cable operations for archrival Disney (she has since gone on to launch Oxygen Media, a cable channel and Web site for women). Her replacement, Herb Scannell, took over a company that had been absorbed into the snowballing conglomerate Viacom Inc. as part of its MTV Networks division. The company faced significant competition from Time Warner’s Cartoon Network and a threat from Fox, which was gearing up to claim its share of the prepubescent audience.

With much of Nickelodeon’s programming acquired from other sources, Scannell’s strategy was to persuade Viacom to invest heavily in original animation. The company agreed to take on animation superstars Disney and Warner Bros. by spending $350 million, in part, to construct its own animation studio, which now has nine series in production. “He bet his job on investment in original programming, and it paid off,” says Michael J. Wolf, an entertainment industry consultant at Booz, Allen & Hamilton in New York. “Part of what he’s done with movies is to recognize how to make that pay off even more.”

With its fingers in most of the media that capture kids’ attention for 5 1/2 hours a day, Nickelodeon offers filmmakers a potent package for cross-promotion. “One of the biggest problems studios have had is figuring out how to compete against Disney in the kids’ market,” says Christopher P. Dixon, an analyst at PaineWebber. It wouldn’t have made sense for Nick’s sister studio, Paramount, to attempt that, but the network, with its ability to cross-promote, had a better shot, he says.

Nickelodeon, says Albie Hecht, the company’s president for film and TV entertainment, has proved that it can pull off one of the toughest tricks in Hollywood--draw a big audience to a family movie on opening day. Her evidence? “The Rugrats Movie.” Based on the TV show, the feature was released with Paramount and grossed more than $100 million in the United States and Canada--the first non-Disney animated film to do so. This year’s “Snow Day,” a live-action family movie starring Chevy Chase and Chris Elliott, had grossed nearly $50 million by early March--not bad for a project that reportedly cost $13 million.

Before “Snow Day” was released, a couple of the film’s young stars spent an evening plugging it during Saturday Night Nickelodeon (SNICK), a slot of variety programming that ranks No. 1 among kids 6 to 11. That may explain why, on its opening weekend, the movie came in third in overall attendance, outranking Disney’s “The Tigger Movie.” Hecht does the math: “We have the No. 1 online site for kids, the No. 1 kids’ magazine. Last year, ‘Rug-rats’ was the No. 1 touring [live] show. We’re the No. 1 cable network. Leveraging all that against the marketing of a movie has been enormously successful.”

Producer Debra Hill (“Adventures in Babysitting”), who has three films in development at Nickelodeon, says she’s impressed by the company’s reach. “You have this built-in media machine,” she says. “I find that extremely attractive because it’s so hard to get an audience these days. There’s so much competition.”

Also appealing to filmmakers is Nickelodeon’s stripped-down slate. They know that if a project reaches the development stage, it has a better chance of getting made than it would at many other studios. “We have a very tight development-to-production ratio,” Hecht says. “That’s because we have a very focused point of view. We usually end up with only two TV pilots for one slot, and often we end up picking them both up, as we did this year. We only do one to two movies a year--we’re trying to get up to three--so by the time we’ve made them, we’re pretty sure our audience will respond.”

And so it is that Nick will again team up with Paramount for the November release of “Rugrats in Paris--The Movie,” in which preternaturally eloquent babies (Susan Sarandon, John Lithgow and Debbie Reynolds will provide the voices) again engage in odd antics. The network is also planning a slate of other films, some based on Nick TV shows, such as “Hey Arnold! The Movie,” and “Prometheus & Bob,” based on a recurring Nickelodeon animated short. Other projects include a movie about the fanciful cartoonist Rube Goldberg and a live-action screen adaptation of the children’s fantasy book “Miss Pickett,” to be produced by Academy Award-winner Wendy Finerman (“Forrest Gump”) and scripted by edgy independent screenwriter Roger Avary (“Pulp Fiction”). Then there are the six to eight original television movies the studio hopes to make each year. The company has mushroomed, with Web sites, high-volume licensing and merchandising and educational TV partnerships in more than 100 countries and territories, from the Baltic Republics to the Philippines. A global brand, it has been able to lure the likes of Whoopi Goldberg, Jim Carrey and Whitney Houston to its award shows.

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Spongebob’s network calls its constituency the nickelodeon Nation, a generation or so removed from the boomers who remember Woodstock and are now running the show. “They have probably the most powerful vehicle on television for reaching this demographic, and nobody else even comes anywhere close,” says Wolf of Booz, Allen & Hamilton. “They have a unique set of people who understand kids in a different way than Disney or any other company might. Watching Nick is cool. While the Disney character might be wholesome, Nickelodeon is irreverent. Disney is something that’s parent-approved. Nickelodeon is what kids want.”

Bingo. That’s the secret of Nick’s success: The folks there figured out what kids want. How they did so is even simpler: They asked. Laybourne, the former teacher, presided over the rise of Nickelodeon culture, which sprang in part from a series of research meetings in 1983. What the network bothered to find out was that kids didn’t like what they were seeing on TV--especially the good-for-you fare Nickelodeon was serving up in its struggling infancy. They didn’t like seeing extraordinary children who were supposed to be role models but only made typical kids feel inadequate. Armed with extensive focus-group data, Nickelodeon has been able to concentrate on appealing to actual children. That was the genesis of the channel’s “kids first” mantra, a philosophy that extends from programming to adopting neighborhood schools.

Not everyone accepts the notion that kids, the most vulnerable viewers, are fair game for the corporate hard sell, no matter how enraptured they appear as they stare at the screen. “I don’t think marketing to children should be permitted,” says Mark Crispin Miller, professor of media studies at New York University. “The children who watch these shows are often too young to make the necessary distinctions between fiction and reality and certainly too young to make the right distinctions between advertising and entertainment. So it seems to me unethical as well as unhealthy to use the medium in that way.”

But the network gets its share of parental applause as well as accolades from some media watchdog groups that admire Nick’s products, including its efforts to make programming more inclusive of girls and minorities.

“Some of our founding principles are, one, it’s tough to be a kid, and, two, the best thing you can offer is a great entertaining place for kids to just feel good about being kids,” says Cyma Zarghami, executive vice president and general manager. “We try to reflect what’s going on in kids’ lives and make them feel they’re not alone, that there are other kids experiencing what they’re experiencing.”

In fact, in the Nick culture, adults are encouraged to experience a sort of second childhood, the hope being that offbeat thinking will ensue. “Creative freedom is the ultimate attraction for me,” says Hillenburg, a former marine biology educator who has happily racked up six years at Nickelodeon. Fresh flowers, an on-site basketball court and free cappuccino aren’t so bad either--to name a few of the employee perks designed to make the animation studio the happiest place on earth.

If Hillenburg is any indication, the strategy is paying off. SpongeBob hasn’t been tapped for the big screen yet, but the Nick multimedia machine is already firing up to pump out SpongeBob merchandise. “Probably a doll and some shirts,” Hillenburg says. He is seated in his office, in which SpongeBob-iana reigns supreme. One wall is decorated with Hillenburg’s scribbled answer to a question raised by an inquiring mind at Nickelodeon magazine: Which is smarter--a sponge or a starfish? (Both are pretty dumb, but if you had to choose, send the starfish to college.) On a shelf behind his desk is a SpongeBob bubble blower. Hillenburg picks it up and rolls it between his hands as he considers other possibilities for SpongeBob products. “It can go all the way to underwear and fruit roll-ups. There’s an action figure in the cleaning section right now.”

Silence. Raised eyebrows. “Just kidding,” he says.

How would one know? In a way, Nickelodeon’s whole Hollywood success story seems like a big, slightly off-color joke. Rest assured: Neither Goofy nor the Looney Tunes folks are laughing.

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Irene Lacher is a Los Angeles writer. Her last piece for the magazine was about antiques.