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Disney Eyes Miss Piggy and Gang

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Posted 20 December 2002 - 05:25 PM

From the Orlando Sentinel

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Disney Eyes Miss Piggy and Gang
By Richard Verrier
Sentinel Staff Writer

December 20, 2002

LOS ANGELES -- Mickey Mouse again may try to bring Miss Piggy and her fellow Muppet friends into the Magic Kingdom.

Walt Disney Co. is mulling whether to make an offer to buy Jim Henson Co., creator of Muppet characters Kermit the Frog and Fozzie Bear, sources close to the matter said Thursday. It's unclear what Disney would be willing to pay the Henson Co.'s financially strapped German owner, EM.TV & Merchandising, but any offer probably would be well below the $150 million Disney bid in 1990 in a deal that unraveled.

The biggest challenge for Disney or any other potential buyer will be finding ways to make the Muppets relevant for a new generation of kids weaned on characters such as Arthur, SpongeBob SquarePants and the Rugrats.

In addition, any sale would not include several of the Muppets' most recognizable characters from the children's television program Sesame Street, such as Big Bird, Ernie and Bert. The rights to those characters belong to the Sesame Workshop.

Sources value the Los Angeles-based firm, which includes Muppets characters such as Miss Piggy and Kermit the Frog and the Creature Shop that creates special effects for movies, at about $80 million.

EM.TV representatives are said to be in Los Angeles this week actively seeking buyers for Henson, which it acquired two years ago for $680 million.

Disney has long had an association with Henson and an interest in acquiring its characters to complement its line of family entertainment. Buying Henson would fit the company's recent strategy of investing heavily in children's programming, particularly on the profitable Disney Channel, whose hits have included the children's television show Bear in the Big Blue House produced by Henson Co.

But the Burbank, Calif., company faces competition from other potential suitors, including billionaire investor Haim Saban and Dean Valentine, former chief executive of United Paramount Network.

Representatives of EM.TV, Henson and Disney would not comment. A source close to Saban said his offer still was on the table. Valentine would not comment.

The muppets made their network TV debut in 1956 on the Steve Allen Show, and The Muppet Showran in first-run syndication from 1976 to 1981. Since then, however, Henson Co. has struggled to make its characters connect with younger audiences.

The 1999 movie Muppets From Space flopped, as did the Muppets TV series, Muppets Tonight, which first ran on Disney-owned ABC. However, a Muppets Christmas movie that aired on NBC on Nov. 29 drew surprisingly strong ratings.

"There's still a wonderful brand name in the Jim Henson Co., that if placed in the right hands could be a very valuable asset," said Toper Taylor, president of Nelvana Communications, a Canadian company that specializes in children's programming. "However, the clock is ticking and the tarnish is growing."

Even so, Disney thinks it could revive the muppets under better management and with the help of the company's television, film, and direct-to-video outlets, company sources say.

"It could be a good strategic move for Disney," said Tom Wolzien, an analyst at Sanford C. Bernstein & Co. "It really adds more characters to their family."

Disney CEO Michael Eisner agreed to buy the company for $150 million in 1989. But the deal unraveled nine months later after Henson's death in May 1990, prompting the Hensons to sue Disney for exploiting the Muppets characters before owning them. Disney countersued, but it reached a settlement in May 1991, agreeing to pay $10 million for limited theme-park rights to the Muppets.

The resulting Muppet Vision 3D attraction at Disney-MGM Studios in Orlando was replicated in 2001 as part of the planned Disney California Adventure in Anaheim, Calif.

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Posted 24 December 2002 - 05:56 PM

More news...

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NEW YORK (Reuters) - Mickey Mouse and Kermit the Frog could soon be new best friends.

Walt Disney Co. is preparing to offer about $135 million for Jim Henson Co., a bid that likely would position it to win the assets of the renowned Muppet maker more than a decade after it walked away from the chance, according to people familiar with the situation.

Although Disney's bid would be a steep discount from the $680 million German children's programming giant EM.TV paid for Henson in March 2000, it is still far too rich a price, people familiar with Henson's assets said. They put the value at no more than $80 million.

Four other suitors also are considering bids for the creators of such famed puppet characters as Miss Piggy and Big Bird, but none is likely to pay as much as Burbank, California-based Disney, sources say.

They said the other parties mulling bids are London-based Entertainment Rights Plc ; privately held Classic Media; billionaire investor Haim Saban; and Dean Valentine, the former chief executive of United Paramount Network.

"EM.TV is in parallel talks with several parties and this means more than two," said an EM.TV spokesman in Munich who declined to comment about specific bidders. A Henson spokesman in New York also declined to comment.

A Disney spokesman said that as a matter of policy the company does not comment on speculation regarding acquisitions, while a spokesman for Entertainment Rights, which develops and licenses children's programming, declined to comment. None of the other potential bidders could be reached.

Disney shares fell 33 cents, or 2 percent, to close at $16.20 on the New York Stock Exchange Thursday.

MUPPETS, SPECIAL EFFECTS, PROGRAMMING

Henson's business includes the rights to its world renowned Muppets characters, the Creature Shop that creates special effects for movies, and about 650 hours of programming.

Under EM.TV's ownership Henson divested its stake in Crown Media Holdings Inc. for $100 million and sold the Sesame Street Muppets characters to the Sesame Workshop for $180 million.

Sesame Workshop still owes about $70 million on the deal, which is to be paid over time, giving Henson a steady cash flow stream, people familiar with that agreement said. However, some of the licensing arrangements at Henson are messy, the company's staff is bloated and it needs an infusion of capital to restore the brand to its former glory, sources said.

Critics say Disney pays too high a premium on its acquisitions. While that idea can be debated, the company is widely seen by analysts to have overpaid for Fox Family Worldwide last year, on which it spent $5.2 billion, including $2.2 billion of debt. Earlier this year, Disney cut about half the work force at renamed ABC Family.

Disney, which already has some partnership arrangements with Henson, was set to buy the company in 1990, but when namesake Jim Henson died suddenly, it pulled out of the deal. Henson's son, Brian, took over the empire founded in 1958.

EM.TV, which has been shopping Henson for more than a year, had been looking to close a deal soon to cover a 64 million euro ($66 million) loan due at year's end.

The company could, however, get an extension from its lenders, who are being apprised of the Henson auction, and push the sale into the first quarter of 2003, sources said.

Privately owned Classic Media, which holds the rights to children's characters including Casper the Friendly Ghost, only wants to buy a half stake in Henson's character licenses and programming, sources said.

Saban, who made his fortune selling his stake in Fox Family to Disney, bid about $128 million for Henson with Evercore Partners Inc. in October. His partner dropped out, but Saban remains interested, these people said.

Valentine is seeking partners, they added, but his financial backing remains unclear at this point.

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Posted 28 December 2002 - 05:52 PM

Disney loses the Muppets again....

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NEW YORK, Dec 24 (Reuters) - EM.TVETVG.DE , a German developer of children's programming, said on Tuesday it will sell 49.9 percent of Jim Henson Co. to an investment group led by a former media executive, helping it to pay down debt while retaining majority control of the renowned Muppet maker.
Dean Valentine, the former chief executive of United Paramount Network, heads the group that won the stake in Henson, the creator of Big Bird and Kermit the Frog. Europlay Capital Advisors, a private equity shop that specializes in media and entertainment, provided financial backing.

Terms of the proposed transaction, which is expected to close in January 2003, were not disclosed.

Valentine, who served a stint at Walt Disney Co.'s Touchstone TV unit overseeing the creation of hit shows "Home Improvement" and "Ellen," expects to build the Henson brand, which has suffered under EM.TV.

"We feel there is enormous potential for growth, not merely from Kermit and the Muppets, but from the expansion of the Henson brand into all areas of family entertainment," Valentine said in a statement.

Valentine will run Henson's operations. His management team includes Mort Marcus, the former chairman of Miramax Television and Video, a Disney subsidiary, and Nick Van Dyk, former executive vice president of Artisan Entertainment.

EM.TV paid $680 million for Jim Henson Co. in March 2000, purchasing it from the Henson family. It began trying to sell it less than two years later.

Walt Disney Co. DIS.N was recently believed to be planning a $135 million bid for all of Henson, people familiar with the situation said. But it was unclear whether that offer was submitted, or whether EM.TV simply opted to sell a minority stake instead.

At least three other suitors had been interested in buying Jim Henson Co., sources said.

EM.TV had a 64 million euro ($64 million) loan coming due at year's end, but it got an extension from its lenders over the weekend.

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Posted 28 December 2002 - 10:30 PM

Not again :x Yet another missed opportunity.
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Posted 11 March 2003 - 08:10 PM

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Billionaire Saban bows out of Muppets sale

Courtesy of Reuters
March 10, 2003

Haim Saban isn't green about children's programming, but he has decided not to make the rainbow connection.

The billionaire investor who built his fortune on Mighty Morphin Power Rangers and is currently in a heated battle to acquire insolvent German media group KirchMedia no longer wants to buy Muppet-makers Jim Henson Co., a person close to the situation said on Monday.

The withdrawal by Saban, who submitted a non-binding offer five months ago, is the latest blow in the protracted saga to sell the lovable kids characters at what likely will be a steep discount to what the current owners paid just three years ago.

Saban's decision comes days after embattled German media rights group EM.TV & Merchandising AG, which owns the stable of singing puppets, including Kermit the Frog -- who famously sang "The Rainbow Connection" and "It's Not Easy Being Green" -- said it ended talks with Dean Valentine, the former television executive. Valentine had been aiming to buy a minority stake.

Sources said on Friday that Walt Disney Co. is back in talks to buy all of Jim Henson Co.'s characters and its program library for $70 million.

Disney, Saban and EM.TV officials declined to comment.

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Posted 12 March 2003 - 05:55 PM

This is very good news for Disney. Hopefully, they will finally buy the Muppets. :|
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Posted 20 March 2003 - 11:06 PM

More good news for Disney!

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Disney May Acquire Jim Henson Co.
Associated Press

LOS ANGELES - Mickey Mouse and Kermit the Frog may be joining forces. Michael Eisner, chairman of The Walt Disney Co., hinted Wednesday that a Disney purchase of the Jim Henson Co., whose cast of characters includes Miss Piggy, could happen soon.

"We have been talking to the Henson company for 15 years," Eisner said, responding to a question at Disney's annual shareholders meeting in Denver, "I would not be surprised to hear that there would be an announcement soon. I wouldn't be surprised that The Walt Disney Co. would be finally culminating years of romance."

Eisner did not specify a possible purchase price but said it probably would not be anywhere near the $100 million to $200 million mentioned as part of the question.

German media company EM.TV had announced last year a deal to sell 49.9 percent of the Henson company to a group led by former UPN president Dean Valentine and investment company Europlay Capital Advisors. That deal fell through earlier this month.

Disney had been on the verge of buying the Jim Henson Co. more than a decade ago, but that deal collapsed after the death of founder Jim Henson.

Also at the meeting, Disney trimmed its earnings estimate for 2003, citing a sluggish retail environment and continuing declines in tourism.

Earlier, Disney had said revenue would grow between 25 percent and 30 percent for the full year. However, Disney chief financial officer Thomas Staggs said weakness in the economy would result in "more moderate growth" for this year. He did not offer specifics.

Analysts have previously said Disney may have overestimated its earnings outlook, given economic conditions.

Staggs, speaking to Disney shareholders at the company's annual meeting in Denver, said war jitters have hurt attendance at Walt Disney World in Florida, although attendance has improved at the Disneyland Resort in California.

Disney's Florida resort is more dependent on air travel while Disneyland draws more of a local crowd.

Staggs also said that a decline in retail sales hurt the company's Disney Stores. Still, he remained confident about the momentum of the company's merchandise licensing business.

At the meeting, shareholders elected a 13-member board of directors, which is smaller than Disney's previous 17-member board.

The company has enacted several corporate governance reforms over the past year, including strengthening the power of independent directors and appointing former U.S. Sen. George Mitchell as a presiding director.

Mitchell will hold at least two meetings of the board each year without company management present.

Shares in Disney rose 39 cents, more than 2 percent, to close at $16.97 each on the New York Stock Exchange.

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