The situation at Cinar may be dire but Canada''s other major children''s entertainment player is in robust health. Toronto-based Nelvana Limited posted strong fourth quarter results as it announced the creation of a new media division and several attendant projects, including the world''s first TV series in Flash Animation.

Total revenue for the year ended December 31, 1999 increased 25% to $91.7m, compared to $73.6m in 1998. Net earnings increased 17% to $10.1m ($1.39 per share), compared with $8.6m in 1998 ($1.21 per share). The company''s merchandising operation saw a 146% increase against last year

Merchandise is the fuel that will drive Nelvana New Media as the company seeks to capitalise further on such book-based brands as Franklin and Rupert via the Internet and CD-ROM. The new division partners the company with entertainment and educational software publisher Havas Interactive for distribution in major markets. Two CD-ROMs based on Franklin will be available for Christmas 2000; the arrangement calls for two CD-ROMs per year.

The new division is set to begin production of When Quads Won''t Leave, a half-hour prime time series created by cartoonist John Callahan to be aired on Canadian specialty channel Teletoon. As the programme will be created with Flash Animation, it will transfer easily to the web site the company intends to launch in the summer.