Disney Bidding again on Muppets

[Sarangel]

EM.TV has had both Dean Valentine & Haim Sabean back out of deals to buy the Muppets in the last five months. This means that Disney is back in action, looking for a bargin. The full article follows:

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.

Valentine said he is structuring a different bid and sources said privately held Classic Media, which owns the rights to children's characters, also is still trying to work a deal. Classic Media officials could not be reached.

EM.TV paid $680 million for Jim Henson Co. three years ago and has been trying to sell the business for more than a year. In the meantime, it has sold off chunks of the company, including the "Sesame Street" characters Henson created.

Critics say the sale has been painstaking because EM.TV has mismanaged the popular children's characters in the short time it has owned them.

As part of a recent financial deal with Sesame Workshop, EM.TV freed the owners of Elmo and Big Bird to create entertainment-type programming, which will compete against the Muppets franchise, said one person familiar with the arrangement.

Sesame, which produces the classic children's series "Sesame Street," had been allowed only to create educational programming with the characters, this person said.

A Sesame Workshop spokesman said executives were not immediately available for comment.

People familiar with the Muppets operations also have said the company's distribution and licensing deals are unfavorable and cannot be reworked for several years. They added that the company is overstaffed and that it needs a capital infusion to rebuild the brand.

Saban initially bid $128 million before completing due diligence last October and before EM.TV monetized a debt owed by Sesame that was to be a source of income for whomever bought Henson. He later reduced his offer to about $50 million, one source said.

Now, however, Saban is embroiled in a takeover battle for KirchMedia, grappling with a rival bidder, private German publisher Heinrich Bauer Verlag.

After meeting on Monday, creditors of the TV group, majority owner of broadcaster ProSiebenSat.1, demanded a decision from Kirch on the competing bids by the end of the week.

 

[lisajl]

No offense to Mr. Saban, but I would rather see someone else buy The Muppets. I know people have problems with Disney, but I think they will stay true to Jim Henson's original ideas.

 

[Bstanley]

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.

I wonder if the program library includes 'Fraggle Rock' episodes?

 

[YoHo]

70 Mil sounds like a pretty good dealy. Money well spent for once.
TO bad EM.TV messed things up.

 

[DisLUV]

Yes a buyout would include all of Henson's library minus the Seasame Street characters since they were sold off.

 

[ToddS]

Yes a buyout would include all of Henson's library minus the Seasame Street characters since they were sold off.

Just curious -- since Kermit is a Sesame Street character who also appears as a "Muppet" proper, where does he fall in this whole thing? Is the eventual buyer of Henson limited in its use of Kermit? Or is the new Sesame Street owner limited? Anyone know?

 

[d-r]

Kermit is a muppet now.

If you watch seseme street lately, no kermit.

Big Bird, Elmo, Ernie, Bert, the Count, Grover, Cookie Monster, Snuffleuffagus, assorted other monsters are seseme street.

Kermit, Piggie, Gonzo, Animal Dr. Teeth & the Band, etc. - everybody from the muppet show - are muppets.

 

[Safari Steve]

If you remember back to the very early 90s, Jim Henson himself was on track to merge his company with Disney. A few weeks before his untimely death, he was part of a celebrity motorcade and press conference at the Disney/MGM Studios. It wasn't until after his death that his son Brian (who did only slightly better than EMTV on the management end) cancelled the merger over what he considered a mis-used promotional photo. I would consider this purchase the long-delayed realization of the late Mr. Henson's wishes.

 

[Another Voice]

It is my "understanding" of the history that Jim Henson had accepted an offer from Disney to buy his company. He was tired of the management duties he had to fulfill and wanted to focus on producing and creating. He had just visited Burbank to check out his office space when he passed away.

His childern had never really been really excited by the idea of selling the company (although Jim's daughter was already working for Disney at that point). And far from it being a misused promotional photo that finally set things off, it was Disney's lawyers. A few days after the funeral for Jim Henson they approached his widow and his childern with demands to renegoiate the deal. Disney viewed Jim Henson as the primary asset, without him they wanted to cut the prices a rumored 1/3 to 1/2.

Needless to say, the family took great offense at Disney playing hard ball business less than a week after they buried their father. The childern, led by Brian, immediately worked to reverse the deal. Given the history of everything that followed (including all the plans Jim had which Disney then cancelled), to call a buy out now the "fullfillment" of wishes is, perhaps, stretching things.

 

[Safari Steve]

The photos were listed as a big deal in newspaper articles at the time.

However coarse the timing, I would have to agree that Jim Henson himself was a major creative asset. The quality level in recent years should attest to that fact (just like the relative creative floundering TWDC did in the years following the deaths of Walt and Roy). The existing characters and film assets have a high value, and the Creature Shop/ Muppet Workshop facilities have a high value. So did the prospect of more wonderful ideas from Jim Henson. That was an immeasurable loss for the entire world. Certainly the financial offer now is considerably less than either of the first two proposals.

 

[raidermatt]

Don't know what really happened, but the timing of trying to renegotiate a few days after the funeral does seem to be questionable in the approiateness category.

Regardless, while I have little faith in how successfully Disney would utilize the Muppets, its still a good content acquisition.

Hopefully they pull the trigger.

 

[DizneyXtreme]

Saban dropped out. He is no longer interested.

 

[Another Voice]

Without having the chance to go back and look at the history, I think what happened was that after Jim Henson's death Disney tried to infer to Wall Street (and any other potential buyers) that the deal between Disney and Henson was locked in. Naturally, the Henson family disagreed and all kinds of threats and counterclaims flew back and forth. The photos and other promotional matters were used as evidence that Disney was implying false things about the state of the deal – specifically they were publicly saying everything was locked and finalized, but in private they were trying to renegotiate from square one.

The deal for Henson's company was separate from his personal services deal. That was very clear well before he passed away. Henson's company had significant value and was being sold to Disney. Jim Henson then, as a private individual, was signing an employment contract with Disney. How one accounts for the loss of Jim Henson is an interesting question since, in principle anyway, he was "out" of the company the moment Disney took ownership anyway.

Creatively, the biggest problem was that The Muppets have been over for a long time. It's rumored that even Jim thought that and was one of the compelling reasons for him to sell. He wanted to do new things; a job with Disney would give him that chance while others tried to spark new life back into long in the tooth characters. Creatively the company still can do good work – the Creature Shop is still tops in town and 'Farscape' (may the Sci Fi channel burn in hell for all time) showed they can still produce interesting stuff. Their recent problems have been due to the collapse of their German parent company and the lack of capital to get new projects underway.