In 1971, Hirsh, Loubert and Clive A. Smith founded Nelvana Limited, a new company with a focus on animation and a goal of creating a Canadian studio. The company got its name from Canadian/First Nations female comic book hero Nelvana of the Northern Lights, one of the comic books they acquired from John Ezrin known as the Canadian Whites.
In 1977, Nelvana released A Cosmic Christmas, an animated sci-fi Christmas television special distributed in the U.S. and Canada that caught the attention of George Lucas who watched the special and contacted Nelvana while they were working on a Halloween special, titled The Devil and Daniel Mouse.
Lucas hired Nelvana to help produce a cartoon for the Star Wars Holiday Special that was broadcast on CBS on 17 November 1978. The cartoon introduced Boba Fett, the iconic Star Wars character. Years later, the cartoon became available to watch again in 2021 on Disney+.
Later, Nelvana partnered with Lucasfilm and expanded the Star Wars franchise once again with Star Wars: Droids featuring the continuing adventures of R2-D2 and C-3PO and Ewoks, two Saturday morning series.
In 1983, Nelvana released its first animated film Rock & Rule featuring original music by Debbie Harry, Lou Reed, Iggy Pop, Cheap Trick and funk group Earth, Wind and Fire. The film was distributed by MGM/UA and Orion.
In 1983, Nelvana produced The Care Bears Movie, which was distributed by The Samuel Goldwyn Co, and broke the record for an animated movie not produced by the Disney Studio. The film won the Golden Reel Award that year in Canada.
In 1987, Hirsh acquired the rights for Babar from The Clifford Ross Company and produced 65 half-hours for HBO, CBC and broadcasters all over the world. The series was produced with Europe-based Ellipse and led to the joint venture studio Le Studio Ellipse. Together with Ross, Nelvana licensed merchandising for Babar and honoured the event with a party that featured an elephant on the mezzanine floor at FAO Schwartz in New York City.
In 1988, Nelvana and Scholastic Corporation produced a direct-to-video series of The Video Adventures of Clifford the Big Red Dog based on the 1962 book. The company's fourth live-action series, T. and T., premiered in 1988 on Canada's Global network. The show starred Mr. T of The A-Team fame, playing a former boxer named T.S. Turner. The station was syndicated in the US. Nelvana faced bankruptcy when the show's original U.S. distributor, Qintex Entertainment (formerly Hal Roach Studios) was going out of business. In six weeks, they were saved when they found a replacement for their US distribution. In 1989, Hirsh produced the animated Beetlejuice series based on the Tim Burton motion picture and won its first Emmy.