Studio B, which just launched George of the Jungle, was recently acquired by DHX Media. Studio B creates programming for the 6-to-12-year-old demographic. © & ™ 2008 Cartoon Network.

U.S. entertainment companies aren't the only ones with an urge to merge. It's unlikely that Canada's DHX Media will ever become a behemoth on the order of Viacom or Time Warner, but with its acquisition of Vancouver-based Studio B, DHX now straddles the Great White North from the Atlantic to the Pacific.

DHX came into existence in May of 2006 when Toronto's DECODE Ent. and the Nova Scotia-based Halifax Film Company merged. DECODE boasted a top creative team and a huge, internationally-distributed inventory of animated and live-action kids programming. (DECODE shows seen in the U.S. include Franny's Feet on PBS Kids, Angela Anaconda on the short-lived Fox Family, and The Save-Ums on Discovery Kids.) For its part, Halifax produced an assortment of shows for children and grown-ups, including Discovery Kids' Lunar Jim and the long-running Canadian satire This Hour Has 22 Minutes.

The incentive was financial: in today's business world, the first commandment is "grow or die," and the new, larger entity was in a much better position to raise capital to expand. "It's an interesting combination of talent, people and projects," says Steven DeNure, DECODE's president. "Our focus is on kids TV and we have great distribution as our ground floor. The company was founded by myself, Neil Court, Beth Stevenson and John Delmage in '97. Neil runs the international sales side -- he's very well known in that area.

"Halifax produces a variety of preschool shows for the CBC, along with 22 Minutes; they also produced Michael Moore's Bowling for Columbine. Michael Donovan [Halifax and now DHX CEO] is an astute finance guy. The idea was 'let's put the two companies together and let each of us do what we do best.' Neil runs the international side; [Halifax president] Charles Bishop, Beth Stevens and I develop and produce shows, and Michael focuses on managing DHX.

"That's really the idea: DHX is an umbrella under which focused creative boutiques could exist, with each one producing a different kind of programming. Individually, none of them would ever get large enough to attract the attention of capital markets, but by creating a larger entity -- with each unit having a high degree of autonomy -- you get the best of both worlds.

"Once you have access to capital you can finance other aspects of your business: extend your distribution operation, acquire additional rights on other properties or in other companies -- like the investments we made in Tribal Nova and Studio B."

DHX's $2 million (CAN) investment in Tribal Noval -- a Montreal-based creator of interactive content, virtual video games and video-on-demand for the 3-to-12-year-old demographic -- earned it a 17% ownership of the company. Tribal Nova's clients include a variety of Canadian media companies, as well as PBS, with the recently launched PBS Kids Play!, an Internet service currently in beta testing.

DHX may be feeling its way into the interactive arena with its relatively modest investment in Tribal Nova, but there was no hesitation in acquiring Studio B, top to bottom. "It's a great company," DeNure enthuses. "It's partly an animation studio, but more than that it's a great creative think tank and production company. They've been around for something like 17 or 18 years and produce a wide range of animated projects. They're very well known internationally. They just launched George of the Jungle and they're working on Martha Speaks [based on Susan Meddaugh's series of children's books] with WGBH in Boston. Teaming with them increases the number of things our international distribution side can sell around the world."

"We've been friends for a long time," says Studio B co-founder Chris Bartleman of his company's relationship with DECODE. "They distributed one of our first shows, What About Mimi. We've had a very successful business relationship, but more importantly we've been friends for many, many years, Neil [Court], Steven, Blair [Peters, Bartleman's partner in Studio B] and I. When they did their deal with Halifax and created DHX, we'd already been talking with them.

"Steven had mentioned that at some point in the future their strategy was for DHX to grow into a bigger company -- and we were on the radar. We thought that would be wonderful, because our main business is in producing and creating content. We only dabble in international distribution. We sell in Canada, but internationally we're always looking for partners, which is a good strategy for us. We've gone to Nelvana with a couple of shows, Classic Media, Sony Family Pictures, those kinds of people. We've always been in the business of making the product, but not really exploiting the product -- we weren't doing any merchandising or licensing. As time rolled along, we saw DHX forming into a strong, exciting company. About a year ago I sat down with Steve at Kidscreen and said 'what's the deal?' We were 19 years old then and we had to do something -- we were looking to buy, build or become part of a distribution company. We had all these great shows, but the exploitation was always with somebody else. It was a great plan for a while, but it was time to move on."