Author: Judy

C. Doughty prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 1999, 2000, 2008 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1- 800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.

L I N D A A . H I L L

K R I S T I N C . D O U G H T Y

Taran Swan at Nickelodeon Latin America (A)

Taran Swan (HBS ‘91), general manager of Nickelodeon Latin America, a cable channel for kids, had conflicting feelings as she boarded the airplane on June 30, 1998, for what would be her last flight for several months. Swan had served as launch director and general manager of Nickelodeon Latin America since its inception. (See Exhibit 1 for area the channel serviced.) She had written the business plan, compiled a team to launch the channel in December 1996, and brought it through its first 18 months on the air. Under her leadership, the channel had ended its first year as the fastest- growing channel in Latin America. Now in its second year, her team was capitalizing on this positive momentum and building on their experience. They had many critical projects in the works, including the launch of a Portuguese-language feed to service Brazil, the largest market within Latin America, and negotiating with a crucial affiliate in Argentina, in hopes of reaching an additional 1.5 million homes. These would secure the foundation on which the channel would be built in the coming years.

Now, Swan was unexpectedly returning home because her four-month pregnancy had been diagnosed as high-risk. Her doctors had ordered that she remain on bed rest for the coming months. While happy to be returning to her husband and home in New York, she was uneasy about her sudden departure and all she was leaving behind. While her intention was to continue to run the channel from New York, she wondered if she should put an interim leader in place in her absence, and if so, who among her team members she should select. No matter what her decision, she suspected she would face new leadership challenges in the months ahead. She could only speculate on what adjustments she would have to make in her working relationship and style with her team.

Origins of Nickelodeon Latin America

Nickelodeon, a cable channel for kids 2-11 years old, was launched in the United States in 1979 and acquired by entertainment powerhouse Viacom in 1986. (See Exhibit 2 for MTV and Viacom structure, and Exhibit 3 for a discussion of the cable industry.) Rather than showing only cartoons, as was typical of most kids’ channels, Nickelodeon produced a variety of programming, including live- action, comedy, drama, animation, music, and sports and game shows. Nickelodeon soon became the most popular kids’ television channel in the country. By 1995, in the United States it was the highest rated basic cable network and had begun international expansion.

Each international channel Nickelodeon subsequently launched had its own on-air identity and “slogan,” while relying primarily on programming voiced over in the local language from the Nickelodeon library. To maintain the integrity of the brand, the channels were launched by a

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“Nickelodeon International Swat team,” comprising of Nickelodeon people from the corporate office who “lived and breathed the brand.” They would come in several months before the launch, build the channel from the ground up, then transition to local management. By 1998, Nickelodeon was operating in more than 30 countries.

In 1993, Taran Swan, then director of Business Development for Nickelodeon International, had begun to explore opportunities in Latin America. Despite compelling demographics, at the time it did not look promising. Latin America was a volatile market, subject to frequent currency fluctuations and devaluations, and the cable industry infrastructure was in its infancy. In addition, Nickelodeon had never had a pan-regional channel—one channel servicing multiple countries—and management was unsure if and how this would affect the business and creative aspects of the channel. Nickelodeon turned its attention elsewhere, and in 1994, decided to enter Australia and Germany. In May 1995, when the launch director in Germany was failing to perform, Swan was asked to replace him. For four months, she worked around the clock with the Swat team, doing everything from acquiring necessary equipment to making programming decisions. She soon learned that in international markets, even key decisions had to be made with minimal information. Business projections did not always hold up, since they were based on planning assumptions that rarely captured the complexities of the local competitive environment. Swan and her team succeeded in building the channel from scratch, and within days of the on-air launch in July 1995, they turned it over to local management.

When Swan returned to business development, she again turned her attention to Latin America. By 1995, direct broadcast satellite service was emerging, and the multichannel market in much of Latin America had started to grow. Two leading media conglomerates had entered the scene. The Cartoon Network had launched in 1993 and Fox Kids Network, which had a program block on the Fox Entertainment Channel, was planning to expand to a 24-hour network by fall. Swan believed that the time to go into Latin America was now, before the market became oversaturated. With renewed interest, she spent the greater part of 1995 and early 1996 conducting due diligence and writing the business plan for entry into Latin America. In May 1996, she convinced the corporate office to allocate development funds to move the business planning process forward. Based on her achievements in Germany, she was appointed launch director.

Taran Swan

Swan had been involved in business development with Nickelodeon International for three years (see Exhibit 4 for Swan’s résumé). During that time, she had studied entry strategies for 10 countries, but Latin America had always held particular appeal for her. She reflected:

We had found that for kids in Latin America there was nothing on TV except for the same old cartoons. Because it was largely a poorer, developing region, people thought they could put anything on the air, and they did. Nickelodeon was good for kids, gender-neutral, pro- social, and gave kids a voice. We were a great brand with a lot of potential. Plus, the channel was really in sync with the culture, so I thought we’d have a high likelihood for success. We could become the preeminent kids’ channel in Latin America.

The New York office had developed a healthy skepticism about international projections. After much negotiation and a careful review of all key assumptions, they agreed upon a budget, but before Viacom would give full corporate backing, Swan would need to prove her business plan was viable by securing minimum distribution (signing up 2 million households). Viacom had seen that MTV Latin America, launched in 1993, was struggling, and they did not want to invest in yet another

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Taran Swan at Nickelodeon Latin America (A) 400-036

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channel without strong indicators that it would succeed. In the coming months, Swan would have to build the channel, all the while knowing that at any point Viacom could “pull the plug.” It was going to be a challenge to persuade distributors to allocate precious slots to a channel that did not really exist. To control costs, her plan stipulated that Nickelodeon would share infrastructure and staff— advertising sales, affiliate sales, research, legal, finance, and human resources—with MTV Latin

America based in Miami,a a “sister agreement” that Viacom had never previously attempted. Swan could not hire anyone new until she had full approval. Until then, she would go ahead with the help of the Nickelodeon International Swat Team and the shared MTV people. She and the Swat team headed to Miami.

Working Toward Corporate Approval

Swan had some misgivings about having the MTV advertising and affiliate sales teams responsible for selling Nickelodeon, as they were accustomed to working with a distinctly different

brand. As one executive explained, “The Nickelodeon people have orange blood.b MTV is much more chic, generation X as opposed to quirky and kid focused. It’s a very different brand, a different sell.” Swan was now asking them to shift into “start-up mode” and do additional work with no corresponding increase in pay. She and the Swat team immediately held a “How-To Nickelodeon” workshop with the shared MTV staff to familiarize and energize them about the brand.

Selling the channel The task of securing distribution fell directly to MTV’s affiliate sales team, whose job it was to sign up cable affiliates. Swan decided, early on, that—consistent with Nickelodeon in the United States—they would not compromise their price or quality. Many operators in the region had virtual monopolies over distribution, which made it difficult to negotiate economically attractive deals. It was strategically important to be on the basic platform of service, because advertisers wanted the broadest distribution possible; customers had to pay a premium to receive channels on the second or third tiers. Many cable distributors were willing to place Nickelodeon on the basic platform; however, they did not want to pay for the programming. This was a proposition Nickelodeon would not accept, although some of its competitors did.

Attracting advertisers Swan knew that equally important to affiliate sales was signing up advertisers. While Nickelodeon was a “dream pitch,” as one MTV advertising sales person explained, cable advertising was inherently difficult to sell. Because there were few barriers to entry in Latin America, the number of cable channels was skyrocketing, so what was already a “small pie” was being cut into increasingly smaller pieces. Both advertising sales and affiliate sales were complicated by a lack of accurate market data or reliable ratings, which made it difficult to construct and pitch competitive deals. Only 10% of the population had cable, limiting interested advertisers to those willing to target a very select audience. Since Nickelodeon was pan-regional, advertisers would need to see value in advertising across the entire continent. Early on, the team decided to launch with two separate feeds—Northern and Southern—to allow advertisers to target somewhat more localized markets.c Swan already had it in the back of her mind to eventually launch more dedicated feeds, and

a Like many American companies with business in Latin America, MTV Networks had selected Miami, the so-called “capital of Latin America,” as their headquarters when they launched in 1993. It was considered a “neutral location.”

b “Orange blood” is a reference to the distinct orange Nickelodeon brand logo.

c In order to account for time differences and to localize programming and advertising for different markets, channels would send out several “feeds”—different versions of a channel. A cable operator would then pull down whichever scrambled feed was appropriate, unscramble and broadcast it. Currently, Nickelodeon Latin America used its two feeds to adjust for time zone differences. Eventually, it intended to show different customized programming and/or advertising on each feed.

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400-036 Taran Swan at Nickelodeon Latin America (A)

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very early began dubbing programming into Portuguese in preparation for a Brazil feed. She took the risk that a dedicated feed to Brazil would eventually become financially viable.

Differentiating the brand Although Swan had not yet determined what the Nickelodeon Latin America on-air image would be, she had a strong brand on which to build. The distinctive, irreverent Nickelodeon brand was legendary in the United States. In 1984, noting the branding success of sister station MTV, President Geraldine Laybourne had defined Nickelodeon’s identity:

Our mission is to connect with kids and connect kids with their world through entertainment. Our brand represents a lifestyle, an attitude, an organizing idea. If you’re any kid in America . . ., they assign a personality to Nickelodeon. They know what we would do in any situation. They think we’re funny. They think we’re messy. They think we’re cool. They think we understand them.d

In such a crowded market, Swan saw her primary concern as capturing attention and differentiating the brand in order to convince affiliates and advertisers to choose Nickelodeon over the plethora of other channels.

Swan decided, in the first of what would become Nickelodeon Latin America’s characteristic “big bets,” to concentrate its money and efforts on one major project to “make a splash.” Donna Friedman, a member of the Swat team who had also been involved in the Germany launch, had the idea to throw a huge, brand-experience party at Jornadas, the largest cable trade show in Latin America. Drawing approximately 15,000 attendees, Swan and Friedman felt Jornadas would be a good forum in which to generate brand awareness and demonstrate how well “Nickelodeon knows kids.” Friedman, a quintessential “orange blood,” was known for her creativity and as a “fighter for the brand.” Swan trusted her instincts and knew she had the creativity and motivation to make the party a success. Much to the consternation of the New York office, Friedman and Swan invested a large percent of their money in the project. Swan explained, “To me, not spending money is a way to ensure you never have long-term success.” Swan and her team went all out and created a “full- blown, branded, kid-experience party.” Attendees could play soccer or be in videos and animation. Everything was oversized, to give them a kid’s perspective. The party was a huge success—people stayed all night and would still be talking about it years later. The team subsequently held a series of “Grow Down” workshops with advertisers, where executives were given a kids-perspective experience, complete with games, toys, and candy. Again, this was to demonstrate how well Nickelodeon knew kids. Swan reflected, “It was a big bet to spend that much on the party and workshops. It could have been a total flop, but we pulled it off. These marketing efforts overcame any barriers. It paid to be different.”

Beginning to build her team Indeed, Jornadas created a sensation and helped to generate ad and affiliate sales. Swan, the Swat team, and the MTV networks people began to put in place the necessary channel infrastructure, including transmission centers, programming libraries, and advertising contracts, all with the clause contingent on final corporate approval. One MTV employee noticed that “Taran did a great job involving all the different departments and allowing everyone to contribute ideas on how to make the launch successful. Even the guy who took care of the video library shared his opinions.” But it was not always easy. One MTV employee explained, “It was difficult to switch from MTV to Nickelodeon. I felt schizophrenic, pulled in two directions.” Throughout, Swan faced new leadership hurdles. She reflected:

d “Viacom, Inc.,” HBS No. 396-250, pp. 3–4.

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Taran Swan at Nickelodeon Latin America (A) 400-036

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I was constantly struggling with how to motivate people, when the project could have been pulled at any time. I was a coach and cheerleader, trying to get people to put in the hours. I tried to give people ownership and help them feel part of a team. I just kept pushing, and kept believing. There were days when I, too, wanted to say forget it. But we couldn’t let this slip by. If we didn’t go in [to Latin America] now, we were never going in.

Meanwhile, in anticipation of receiving approval, Swan worked with MTV’s human resources staff to find people for Nickelodeon’s dedicated programming, marketing, and finance positions. She had convinced Valerie McCarty, currently director of international public relations for Latin America and the Caribbean at Turner Broadcasting System, Inc. (TBS), to come on as head of publicity as soon as the channel received full corporate approval. McCarty, a native of Puerto Rico, was impressed by the operation and looked forward to moving to Miami. Swan had met McCarty only once, based on a recommendation from a trusted former colleague, but had been immediately struck by her energy and ability to communicate. Swan also had her eye on a candidate to lead programming. She had targeted Stephen Grieder, executive producer at Channel [V], a music channel in Asia. Grieder had previous experience with Nickelodeon, was known as a creative genius, and had some familiarity with Latin American culture. Swan knew he was exactly who she wanted and had been aggressively recruiting him since May. It looked like he was intrigued. Swan was also eager to convince Donna Friedman, creator of the Jornadas party, to stay on, though she was not sure in what role. While Friedman’s single-mindedness about the brand had in the past caused some tensions with her peers, Swan wanted her on board because of her contagious enthusiasm for the brand and out-of-the box thinking. Swan was not sure who to hire for finance—she did not know of anyone within the industry, so she began to look outside.

Working with Corporate Approval

In September 1996, Nickelodeon Latin America finally secured its minimum distribution targets, and obtained full corporate approval. (See Exhibit 5 for timeline.) Unlike in Germany, where Swan handed the management position over to someone local shortly after launch, senior management had asked her to commit to staying on as general manager with a two-year contract. Swan’s bosses—Jeff Dunn, COO of Nickelodeon, based at Nickelodeon headquarters in New York; and Tom Hunter, president of MTV Networks Latin America (and acting president, MTV Latin America) based in Miami—felt she was in many ways an obvious choice to lead the channel. She had written the business plan, had extensive experience with the Nickelodeon brand, and had successfully launched another channel. They knew her to be a clear thinker and had confidence she could handle the business and administrative responsibilities. Dunn, however, harbored some reservations about Swan’s lack of experience leading a larger organization and managing an ongoing profit and loss (P&L). Due to a series of changes in senior management, Swan had had five bosses in the previous three years. None in their short tenures had reported evidence of strong leadership skills, though she had a reputation for being exceptionally competent, warm and personable, and people liked working with her. Her style involved a great deal of delegation, and while this had worked in the past, this position would offer new challenges. In addition, Swan did not speak Spanish fluently, and had no previous experience working in Latin America. Dunn and Hunter concluded that with Hunter in Miami to give her support, she was the best person for the job.

Swan was thrilled for the opportunity. From her time in business development she had seen that when a business plan was developed and executed by entirely different teams, often the vision was not implemented as it was conceived. This was her chance to take what had begun as a “gleam in her eye” through the on-air launch and turn it into reality. As she explained, she was “wedded to the

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400-036 Taran Swan at Nickelodeon Latin America (A)

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numbers,” so would be diligent about meeting them: “Before, in business development, I wasn’t accountable. This time I was. We would meet the projections because I owned those numbers!” While she was nervous about the leap in responsibility, she was confident in her ability to learn. The only drawback to this “dream job” was that her husband was still in New York, so she would need to be away from him, as she had often been for the previous two years while based in London and Germany. They had never gone more than 10 days without seeing each other. Viacom agreed to allow her to commute, spending every other weekend in New York.

With approval, Swan began to hire her dedicated Nickelodeon staff. McCarty arrived within the week. Swan filled the lower level positions quickly and brought in her department heads one-by-one in the coming months. Her “big bets” strategy extended to her hires—she took risks and invested to get good people. Some of these hires were unconventional, and she had to fight New York for them, but she felt that building a strong team of people in whom she could place her trust was critical. She reflected:

I focused on getting the best team possible. I wanted really bright, ambitious people who would give their all. I made it clear to anyone who was going to work at the channel that this was a team, we were going to work together, we were going to get along. There would be no individual agendas. I had learned in Germany that I wanted a multidimensional team—I didn’t want people saying “It’s not my area or my responsibility to do that.” I wanted them to be involved in all aspects of the business, so they could become more well rounded, help each other and build on each others’ areas, and really understand the business better.

Swan knew the different pieces of the business had to fit together seamlessly—the channel had to move as a “crab walk.” Though the Nickelodeon team would ultimately be based in the same building as MTV (in offices that would be under construction through spring of 1998), for the time being most of the dedicated staff was housed three blocks away in a cramped conference room-like area that McCarty described as a “nasty little temporary space.” To facilitate communication, Swan formalized Tuesday morning executive team meetings. (See Exhibit 6 for Nickelodeon Latin America executive team and Exhibit 7 for brief biographies of selected staff.) These were intended to serve as a forum for communication and consensus-based decision making. The team had to make many complex decisions as they developed an image for the channel that would be unique to the Latin American market while consistent with Nickelodeon U.S. These meetings were attended by department heads and other key people (legal, HR, and sometimes Hunter). Swan would begin with her own list of issues, then give each department an opportunity to discuss their current projects and any critical decisions. From the beginning, Swan tried to encourage her staff to question each other. She also made a point of regularly cc’ing relevant people on emails. Because of all their preparation and work in securing distribution, Swan’s new team hit the ground running, but with only two months until launch, they still had many decisions to make and a great deal to do.

The Nickelodeon Latin America Team

Programming and Packaging the Channel: Defining the On-Air Identity

Swan knew all along that programming would be the “heart and soul of the channel” (see Exhibit 8 for an explanation of cable programming), and she had worked hard to convince Stephen Grieder, 36, to lead it. She explained, “He was the best, and that made the business best. I put in extensive personal time with him, trying to get him psyched about the channel. I was willing to give

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Taran Swan at Nickelodeon Latin America (A) 400-036

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him “King of the Hill” responsibility and pay him more than myself, if necessary.” Grieder was immediately infected with Swan’s enthusiasm and business savvy. He explained what attracted him and convinced him to join as vice president of Programming and creative director:

From the first minute, I sensed that Taran was very analytical and an extremely good listener. She asked probing questions about how I had handled challenges in the past, my work style and my view on what had to be accomplished to make Nickelodeon Latin America successful. As we would all learn, with Taran, you “dug your own hole”: She’d listen and carefully question your views, but once she had signed off and had invested you with the authority to act, you were held to your claims.

I was also impressed by her tremendous and true self-assurance. There was no ego involved; her only agenda was the channel’s success. Through everything Taran said and everything she did, it was all about “how will this support what we’re trying to accomplish with this channel?”

In early November, on Grieder’s first day of work, Swan, McCarty, Friedman, and the rest of the Swat team held the first of what would become Nickelodeon Latin America’s annual “Synergy Meeting”—an off-site strategic planning session in which they affirmed and refined their identity and decided on projects for the coming year. At this juncture, Swan and her team needed to define the unique Nickelodeon Latin America identity of the on-air channel and determine how they would “package the channel.” Being pan-regional presented a challenge. They needed a message that would capitalize on the diversity of the 16-plus countries and three languages (Spanish, Portuguese, and English) they would reach across Latin America and the Caribbean. As one employee explained, “It’s not just ‘they all speak Spanish, so it’s all the same.’ In Brazil, it’s Portuguese, and even among the countries that speak Spanish, accents and dialects vary dramatically. Likewise, the cultures differ. Not everything crosses borders easily.”

Working with focus groups, they learned that kids were curious about their peers in other countries. As a pan-regional service, they could harness this natural curiosity by making kids the “face of the channel,” rather than following the example of other Nickelodeon international channels which often relied on finely honed graphics and slogans to differentiate and communicate the brand. Swan’s team decided instead that Grieder should invest most of the programming budget into the more expensive project of filming kids in Latin America, capturing their accents and lifestyles as “spots” to show on-air. Rather than diluting the cultural differences, this would permit them to celebrate each country’s uniqueness, allowing kids to hear others and themselves be heard. Swan hoped that their slogan “Nick te conecta a tu mundo”—”Nickelodeon connects you to your world”— would work to unify kids, rather than alienate them. Grieder’s team (10 people who, like Grieder, were all of Latin American descent) began to turn out stellar spots that the rest of the executive team loved and believed would draw kids to watch their channel.

Swan was pleased with Grieder’s propensity to share creative ownership for the channel with the entire team to best leverage the channel’s resources. For strategic decisions related to the brand and programming (including what was appropriate to air from the U.S. library and whether/when to use local programming), Grieder consulted the executive team. They rejected the popular U.S. show “Ren and Stimpy,” for example, believing that the somewhat irreverent cartoon would be found offensive in the context of many Latin American families. His peers quickly learned, though, that he was protective of his team. Some complained to Swan that the executive team was not let in on the creative process sufficiently early for their input to have an impact. Swan encouraged them to talk with Grieder about their concerns rather than approach his team members directly. Grieder always had an explanation for his actions. For example, he knew some of the graphics were less than ideal,

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400-036 Taran Swan at Nickelodeon Latin America (A)

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but as he pointed out, they were the best his team could do given their budget allocation and the company’s strategic emphasis on live-action filming.

Counting Down to Channel Launch

Swan’s team moved quickly and worked around the clock. She worked closely with her new department heads, carefully reviewing the terms of the many deals they were negotiating. Her staff quickly learned that the intense questioning many had experienced in their initial interviews was her standard style. One department head explained:

On the one hand, Taran was easygoing and fun. But she would ask and ask and ask to get to the bottom of something. You would say it to her, she would say it back to you, so that everyone would be 100% clear on what we were talking about. Once she got information and knew what you were doing, you had to be consistent. She would say, “You told me x, why are you doing y? I’m confused,” then she would come on stronger. You really had to do your homework and stick to it. She would get mad if someone tried to give her the runaround. You were held accountable. Taran’s pet peeve was if you weren’t thinking strategically. If you were just a worker-bee, she would lose faith in you. She needed to know your brain was not just on the task at hand.

On December 20, 1996, Nickelodeon Latin America launched a 24-hour channel in Spanish, Portuguese, and English that reached over 2 million subscribers in 16 countries. They were on their way.

Marketing

Now that the channel was on-air, marketing finally had an actual product to promote. Swan knew that having the right person to head the department would be key, someone who both understood the Nickelodeon brand and could think about it strategically. While she had looked for an outside person, she began to feel she had the untapped potential at her fingertips, within the channel. Since McCarty’s arrival in September, Swan had become increasingly aware of her clear business savvy and natural leadership skills. Though McCarty was only 28 and new to the brand, Swan was interested in giving her additional responsibility. From her first day, Swan explained, McCarty had taken charge:

When she came into our temporary office space, which was a total dive, she came in and said “Taran, this is a mess. Do you mind if I do. . . to get the space together?” If I was traveling, she would step in and deal with issues as they came up or remind me of what I needed to do. She always had a point of view whether it was in advertising sales or programming: “I think you guys should look at this.” She took the risk and would share it, even if it wasn’t always popular. Some might have perceived it as nosing in, but I saw it as evidence that she never felt like something wasn’t her responsibility.

Another possibility was Donna Friedman, 28, who had decided to remain with Nickelodeon Latin America post-launch and had expressed interest in learning more about the broader aspects of building a marketing organization. Swan had been impressed with Friedman’s creativity in planning the Jornadas party and developing the innovative “Grow Down” campaign with advertisers. Though Friedman’s experience was with creative, Swan felt she could harness her potential toward more multidimensional strategic thinking.

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Taran Swan at Nickelodeon Latin America (A) 400-036