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.