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leffrq A Montgomery)is breathingT?ew life trtto softrc

old comic book fauorites.

R,"n,e Rich wasbroke, Sad Sack was downright depressed, andCasper had given up the ghost. Such was the sorrystate of Harvey Publications, the venerable comicbook company behind the Croesus, Job, and ChildeHarold of the under-six set. In 1982, after morethan four decades of profitable publication, withcharacters who had become true Americana, thefamily-owned business succumbed to internalbickering and the presses stopped.

They started rolling again, tentatively, in 1986.But by then it was a world of wisecracking Ninjaturtles and hostile takeovers-no place for afriendly ghost who says "Golly," or for RichieRich, the world's richest kid. And then, RichieRich came to life in the form of a 2S-year-old mul-timillionaire's son named Jeffrey A. Montgomery.

In 1989, Montgomery led a $6-million to $B-million friendly buyout of Harvey Publications,the onetime leader in children's comics. He's sincehelped return it to its overall number-four spot,behind Marvel, DC, and Archie Comics-a turn-around so dramatic that last July, MCA bought achunk of it. ool was so consumed with the project,"says the schoolboyish Montgomern "that I neverthought it'd be unsuccessful. It's like: Casper theFriendly Ghost

-

this guy's gottn be worth the kindof money we're payingl" (continued on po.ge 43)

By Frank Loaece

'*-

W.

CONTINENTAL PROFILES FEB. 1991

ftlontgomery

( cctnt inue d from pcr ge 2 5 )When Montgomery's Santa Monica-

based HMH Communications, Inc. pur-chased Harvev in August 1989, Harve,vwas publishing a mere three titles. An-nual circulation was in the two-millionrange. This was a cataclysmic drop: Asrecently as the early 1980s, Richie Richalone had starred in more than 26 comicbook titles, simuhaneousLy. Worse, theHarvey film library of 248 cartoonshorts was not only dormant, it rvas lost.

It /T onleomerv has since man-tl tall /tI I / I agcu r() ru, ar. and reslore lheIl, l-J- Y Inegatives, as well as crank upold and new creative teams and launchseveral titles

-

including a couple ofhitsstarring New Kids On the Block-thathave helped increase circulation to anunaudited but estimated 36 million an-nually. This nerv vitality enticed MCA topurchase what Vlonlgomerr sa1 s is a"less-than-20-percent" stake in thecompany! a stake that opens up the pos-sibilities of theme-park attractions, tel-evision and home-video distribution"and even feature films

-

turning Harveyinto a franchising base of brand nameswell-known to the current generation ofparents.

"He's one sharp cookie," says an ad-miring Don Thompson, coeditor of theindustry journal Comic Buyer's Cuide."He not only knows what he knows, buthe knows what he doesn't know, and heknows what he needs to know about whathe doesn't. Nobody heard of him incomics until this yearo but he has moreunderstanding of the comics businessthan anyone I've ever talked to."

That's not something a casual ob-server might suspect. Ensconced in anor.erstuffed chair during afternoon tea ata tiny and tony Park Avenue hotel, theclean-cut, collegiate Montgomery seemsfar more likely to be discussing FederalReserve policies than Richie Rich's Lit-tle Lord Fauntlerov suit. As the well-educated scion of James F. Montgomery,chairman and chief executive of thegiant Great Western Financial Corp.,Montgomery certainly is capable of talk-

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ftlontgomery

ing multiples-on-earning. Yet whilebusiness is in his blood. it's also clear hesees something in Harvey Comics thatdoesn't show up on a balance sheet.

o'I was a casual user of comics," Mont-

gomery says. "I read Harvey Comics andDC Comics-Casper, Richie Rich, andalso Superman, Batman. I was into thestuff that was on television. I certainlydidn't grow up in the comics world." Yet

,Montgomery's effortsbaue been so

successful tbat last))ear McAbougbt a

cbunk of biscomparry.

the Harvey animated shorts made an in-delible impression on him. "The his-toric Casper cartoons," he says, "have tobe treated with total care."

In fact, they hadn't been, not even byHarvey. The company, founded by Al-fred Harvey in 1940 when he was noolder than Montgomery is now, hadgrown lackadaisical with decades of suc-cess. It had been on a roll since the hal-cyon 1940s-the "golden age" of com-ics

-

buying most of the ParamountPictures cartoon library in the 1950sand turning a flop character named Cas-per the Friendly Ghost into a bonanzathat spun off a host of new characters,including Wendy, the Good Little Witch,and a little devil called Hot Stuff. RichieRich came along in 1953-created byHarvey and Harvey artist Warren Kre-mer- and was still strong enough in theI9B0s to carry his own Saturday-morn-ing, network cartoon series.

But when Alfred's brothers and com-pany partners, Robert and Leon Harveyodied in the early l980s, and Alfred him-self took seriously ill, Harvey fell into

the hands of squabbling cousins. "Ev-erything was not going so well for us,because the brothers died and the sis-ters-in-law got involved, and it was notvery nice," says Victoria Harvey, Al-fred's wife. o'We were in litigation."

The three families, says Montgomery,"couldn't ever come to any resolutionabout who to sell the business to. So theyput their children in charge, with allthree children sharing power. And thatwas a prescription for further disaster. It

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took three approvals to sign any checkfor over $5001" Recalls Sid Jacobson,Harvev's longtime editor, "It was war."

A nother problem was that atA Harrev. neatness didn't count.

I \"rn" company records were ina slate oltolal disorgsniTslion. its oper-ations the same," Montgomery recalls,"There was nothing iz files

-

just docu-ments piled in boxes over the years! Ittook three full-time people threemonths," he savs, still amazed, "to getto the point where the records were insome sort of meaningful order."

Worse was that the cartoon libraryand the reproducible proofs of comicbook art were scattered. "lt took us sixmonths to find all of the historic ar-chives of proofs and film," Montgomerysays. "We eventually found about fivetons ol motion picture film and anotherfive tons of comic book film and proofs[stored in] over ten locations."

Such chaos might have deterred amore experienced suitor. Indeed, Mar-vel Comics spent a year courting Har-vey, and Montgomery says he has alsofound paper-work citing overtures fromHearst and MCA. "But it's not like thepresident of some big company can say,'Well, I'm now going to devote 100 per-cent of my time for the next four monthsto unraveling this mystery.' You can en-vision a vice president saying, 'Hey, thisis a great thing. Let's begin discussions,'and finally throwing his hands up in theair and saying, 'This isn't worth it!' "

To Montgomery, it was. Fresh out ofthe Peter Stark Motion Picture Produc-ing Program at the University of South-ern California's School of Cinema-Tele-ri'ion. the young businessman washungry. He had already started an un-successful auto-body shop when he was17, and had completed a movie projectthat introduced him to many of the in-vestors who would later form HMH.

That project was a comic redubbing ofThe Hideous Sun Demon, an obscure,1959 B picture that the group remadewith new, kitschy dialogue voiced by a

(continued on page 50)

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\( c ontinue cl from p age 46 )then-obscure comedian Jay Leno andothers. Montgomerv and friends raisednearly $1 million, saw the projectthrough to its completion, and soid thefilm to Lorimar for enough, he savs, 'otocapture our investment with a small re-

turn. But I learned," he adds. "that thisisn't enough for a lot of people. A reason-able rate of return is not acceptableLhen tou're lalking aboul renlure t upi-tal. People want 50, i00, 200 percentreturns in a very short period."

Montgomery shrugged and went tograd school, interning one summer atParamount and lining up a job at Colum-bia Pictures. He raised $6 million for alow-budget film while at Columbia,moslll lrom the Sun Demon inr eslors.

Yet by the time Montgomery hadamassed this investment pool, he real-ized the high odds of striking out with alow-budget feature. About this time, the

Montgomelyrealized that tbe

well-known Harueycbaracters could be

ualuable.

billion-dollar RJR Reynolds buyout ofKraft was making headlines. "What theyhad bought, essentially, were the brandnames," Montgomery observes. "What'sthe difference between a Hvdrox and anOreo? Nothing much besides the brandname. And I thought," he says, withtongue onll' halfway in cheek, "that thefuture in America is brand namesl Youneed equity built up over time in trade-marks and copyrights."

fter convincing his backers toshift their investment funds. hel-regan l"oking al t ompanie'. in-

cluding National Lampoon, and quicklynoticed the boom in babv-boomer ba-bie.. Familv-oriented enterlainmenlwas starting to explode, and it struckMontgomery that the well-known Harveycharacters, properly managed, coukl ber.aluable.

But how do vou price Harvey Comics,Montgomery wondered, especially withits records and even its assets in disar-ray? "You couldn't value the company bytraditional business measures such ascash flow, or on a multiple-on-earningsor multiple-on-revenues basis

-

[the in-

50 CONT]NENTAL PROFIIES FEB, 1991

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tlontgomery

formation] was nonexistent. "Yet Montgomery did know what

it costs to make a lull-animation, six-to-eight-minute theatrical cartoon

-

in thecase ofthe latest Roger Rabbit short, anestimated $1.5 million to $2 million. Ofcourse, the value of a Baby Huey or aStumbo the Giant is different from thatof a Roger Rabbit or a Mickey Mouse,and assessing that difference uas a crit-ical factor in determining the film li-brarv's value. But Montgomery knowswell the lessons of Licensing 101.

is first step, once the com-pany had been purchased,was to revitalize the comic

books themselves, which are somethingofloss leaders intended to keep the char-acters before the public. Montgomerythen compiled 65 half-hour Casper car-toon programs for TV syndication. Thecartoon series has been leased in foreignmarkets for two- to three-year runs be-ginning this September. He's now nego-tiating a master toy license with Hasbrothat would lead to national TV syndica-tion

-

coinciding with Harvey-characterdolls, clothes, and the like.

"Everything keys off television,"Montgomery notes. Yet if that were thesole essential, Casper and his friendsmight not have fallen into such disre-pair. Good management is crucial, andMontgomery has the knack.

"In defense of the silver spoon peoplelike to put in my mouth," he says withfaint amusement, "it's very common, ifyour father's a doctoro for you to becomea doctor too. My dad's a banker, and Ididn't want to be a banker, but he's abusinessman, and Iom a businessman. Iwas around it, I learned the language, Imet the people. That was a birthrightthat came along with the family I hap-pened to be born into; that put me, ad-mittedly, ahead of game."

At least he's working for his supper.And so, in a way, is Richie Rich. n

Ilen York-based, writer Frank Lctuece isthe author of Hailing Taxi.

52 CONTINENTAL PROFN-ES FEB, 199I