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Nobody can accuse Thomas Kinkade of thinking small. The "Painter of Light," as he calls himself, has long dreamed of putting his bucolic works of sun-splashed cottages, twinkling lanterns and luminous gardens "in every home on the planet.'' Though critics sneer, Kinkade has sold 10 million digital reproductions. He took his company, Media Arts Group, public in 1994, and has licensed his images for coffee mugs, La-Z-Boy recliners and even a romance-novel cover. When a Kinkade-branded housing subdivision opened north of San Francisco last year, he declared that "anything Martha Stewart has done, we can do. Anything Walt Disney has done, we can do."
But Kinkade's grand plan is not a pretty picture these days. Last year Media Arts lost more than $13 million and went through two CEOs. More than a dozen Thomas Kinkade galleries around the country closed, and the company's stock is scraping along at about $3 a share, down from its high of almost $25 in 1998. Of all the surprising companies that have sold stock to the public over the past decade, this marriage of art and commerce looks increasingly puzzling. Why should a painter's company be traded on the New York Stock Exchange in the first place? And given that art's value is predicated on scarcity, how can anyone create an appreciating market for mass-produced "limited editions"?
But during the booming '90s anything seemed possible, and Wall Street analysts wrote glowing reports about Media Arts' prospects. To understand why, first abandon any thought of the artist's twirling his paintbrush in some garret. Kinkade's pieces--from $295 paper lithographs to $10,000 hand-retouched canvases--are manufactured at Media Arts' high-tech factory south of San Jose, Calif. There a digital photograph of each original is reproduced thousands of times onto thin plastic film that is then glued to canvases. They're sent to a studio where "highlighters" sit along an assembly line, dabbing oil paint onto set spots. The factory churns out 10,000 pieces a month, each signed by a "DNA pen" containing drops of Kinkade's blood and bearing a numbered certificate on the back to guard against forgery.
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Prices are set according to an elaborate Editions Pyramid. At the top is the Masters Edition, highlighted and signed by Kinkade himself, which have sold for upwards of $15,000. The more common canvases, which have never been touched by Kinkade, sell for about $1,500. Media Arts instructs gallery owners to promote the art as "an investment" to would-be collectors and strictly forbids discounting. In the past, sold-out editions have appreciated considerably. Some of Kinkade's earlier works now sell for nearly $100,000.
So what went wrong? The key to Kinkade's business is volume, and sales cratered when the economy softened. Last fall Media Arts liquidated thousands of unsold lithographs from its California warehouse. The pieces showed up last December in discount chain stores for as little as $59 each. Licensed dealers, required by Media Arts to sell the prints for $295, were incensed--as were some customers. "I had people walking in with paintings under their arms, demanding their money back," says Thomas Baggett, who operated three Kinkade galleries in Louisiana. "They thought the integrity of the product had been undermined." Last month Baggett sued Media Arts for unfair competition. CEO Ron Ford calls the complaint "frivolous." Disgruntled dealers have filed similar claims in Nevada and California. Some collectors are trying to unload their Kinkades--often at a discount--on eBay.
Despite the turmoil, company officials still see a dappled and dewy future. Kinkade was unavailable for an interview, but CEO Ford says he will report rising revenue and profits this week, thanks to an improving economy and cost-cutting. Now the company is dreaming big again, and wants to expand the brand--into publishing, TV, possibly a theme park. Ford says Media Arts should be compared to the Walt Disney Co. when it was 10 years old. "If Walt Disney had said, 'I'm going to build a multibillion-dollar empire on the back of a mouse,' people would have said, 'You're joking'." Maybe Kinkade should try painting mouse ears on his next glowing sunset.
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