Nickelodeon–SpongeBob SquarePants

Herb Scannell

President, Nickelodeon Networks, MTV Networks Group

Jeffery Dunn

COO, Nickelodeon, Nick at Nite, TV Land, and Spike TV President, Nickelodeon Film and Enterprises

Cyma Zarghami

President, Nickelodeon Television

Herb Scannell knew he was onto something really big was when his college-age nephew mentioned that SpongeBob SquarePants was his fraternity brothers' favorite program. Hello? The show was created for the 2-11 demographic.

Since Nickelodeon launched the character in 1999, though, the indomitable invertebrate has become a cartoon icon—for all ages. That the 18-49 demo represents as much as 25% of the cartoon's average audience of 2.2 million per show is icing on the cake for Scannell, president of Nickelodeon Networks, MTV Networks Group.

Today, the series airs 20 times a week, and ratings confirm the fuss: Not only is it the No. 1-rated show among both boys and girls 2-11, it is also Nick's highest-rated and most-watched show among adults 18+, adults 18-24, and adults 25-49. SpongeBob saw a more than 22% increase in 18-24 viewers for the first quarter this year compared with the same period last year.

"It's a keeper for us," says Scannell. "You can't make hip happen. SpongeBob is hip because he is, well, square."

While Scannell considers his role at Nickelodeon to be more of a spark than a rainmaker, that inimitable spark has ignited a firestorm of fallout in products and licensing deals. Few other TV-based businesses have been as aggressive in spawning its brands into merchandise, movies, and live events. And the strategy held in place for the rollout of SpongeBob products in a range of prices and retailers.

Paraphernalia was first marketed in 2000 at Hot Topic, a chain of mall-based stores focusing on teenagers and young adults. In 2001, distribution of exclusive lines extended to Target before appearing on shelves of most mass marketers the following spring.

There are 150 licensees for SpongeBob SquarePants products, with a cha-ching factor of $2.5 billion in retail sales. Consumer products run the gamut at all tiers of distribution and across multiple categories, including toys, party goods, apparel, home furnishings, packaged goods, and novelties. The imprint informs paper towels, toothpaste, underwear, bowling balls, and neckties. Some discontinued items have reached cult status: A now-vintage promotion giveaway toy, the SpongeBob Slammer, has been spotted on eBay for $100.

So where will the next SpongeBob come from? Probably from in-house, just like the sponge itself: Creator Stephen Hillenburg was an illustrator working in Nickelodeon's Burbank, Calif., studios.

"I like to challenge people and urge them to be provocative and strategic," Scannell explains. "We don't work in an environment of intimidation, and I never think I'm the smartest guy in the room. The best ideas do not always come from the top. They come from the person who asks the open-ended question, 'What about...?'"