Disney making two purchases

[Goofyposter]

This is a great move from the standpoint of Michael Eisner and from the the standpoint of all those interested in keeping Disney independent. It keeps the Muppet characters at Disney. Opens the door for the further purchase of Henson assets. Deflects attention from Disney/Comcast, Disney/Pixar, Disney/Disney, etc. and via the Henson heirs gives Eisner's Disney a big boost in the PR dept.

IF in fact this IS "a great move".....why is it that our boy genius CEO did not make this move earlier????.....was it a 'why buy the cow if you can get the milk for free' concept?.....or is this in fact a move intended to try to passify stockholders as a "promise" of things to come for TWDC??????

 

[mrtoadslastride]

Originally posted by Goofyposter
IF in fact this IS "a great move".....why is it that our boy genius CEO did not make this move earlier

I read recently that the Henson Company was having financial problems which might explain why they sold the rights to the charracters. I know the Henson family dislikes Eisner a great deal due to their business dealings in the past, but if they were struggling they may not have had any other choice.

I wonder if the Imagineers are dusting off some of the their old plans for the mini Muppet land that was going to be added to MGM?

 

[Peter Pirate]

The Henson families comments today certainly shed no sign of ill will towards eisner, of course considering the sale this could be expected, I suppose. But what has transpired, and given the platitudes of the Henson's towards Eisner's Disney, it's great PR.

Goofyposter, this is a great move for the time. A month ago it didn't seem the Company or the boss's job was in peril so certainly this type of thing could wait. But with lions at the gate and a reputation under fire whats a CEO to do? Obviously, make the best deals that stave off the invaders and give the best PR...It appears that this was done.

Sidenote: One other thing needs to be remembered here. While Michael Eisner has been a villian on these boards and by Disney "lovers" for a long time, he hasn't generally been viewed this way by the rest of the world, including the wall st, investment types who ultimately make the (Disney) world go round (and are certainly in play right now)...

 

[Escapecar]

Question:

I'm assuming this deal doesn't include the Sesame Street Muppets, which presumably belong to PBS.

But who "owns" Kermit? He's the only Muppet I can think of who works in both worlds.

 

[freediverdude]

All I can say is, Boy, Michael Eisner must have done some SERIOUS and FAST kissing up to those Hensons to pull that off. And probably gave away quite a bit of cash too, as assumed because the financial details aren't being released. I read that no the Sesame Street characters aren't included, as they are owned by the company that produces Sesame Street. Not sure about Kermit though, that's a good question. But I agree that I hope he didn't pay a whole lot, because all it is is a license to use the Muppet group of characters. Not the creative talent behind them up until now, making their appearances. And not the studio for producing them. So this is a "nice" announcement, but nothing terribly big in my opinion, other than the fact that he managed to convince the Hensons to sell him something despite the fact they don't like him.

 

[Escapecar]

Is buying the whole Henson organization really a good idea?

Seems to me that unless they have unique technology, all you're really buying (above and beyond the rights to the characters) is the talent of the people who work for Henson. And unless those people are locked into long-term contracts, they can all walk off the next day and make entertainment products for someone else. Which means you've essentially paid for some empty buildings.

But I don't really know much about the entertainment business, so I could be mistaken.

 

[YoHo]

Granted, they could up and walk with a merger, but then we're talking about people who live and breath Jim Henson productions and we're really talking about Brian and Frank Oz and the creative people that run the place. That's a risk you take in a merger, but it's the people that matter.

 

[crusader]

Buying the Henson organization would be foolish right now. Why would they want to take on that debt and overhead? .

Here's all that's being reported for now:

http://edition.cnn.com/2004/BUSINESS/02/17/disney.muppets.ap/
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Mickey buys Kermit, Miss Piggy
Wednesday, February 18, 2004 Posted: 0254 GMT (10:54 AM HKT)

LOS ANGELES (AP) -- The Walt Disney Co. says it will buy the "Muppets" characters, including Kermit, Miss Piggy and others, as well as the "Bear in the Big Blue House" franchise from The Jim Henson Co.

Disney plans to make new television shows, video games, movies and other products with the existing characters as well as develop new characters in the coming years.

Financial terms of the deal were not disclosed.

The deal, which is expected to close in about two months, culminates a decades-long pursuit of the Muppets by Disney, which came close to acquiring the characters in 1990. The deal fell apart shortly after the death of company founder Jim Henson.

The company then was bought by German media company EM.TV, which sold it back to the Henson family last year.

The deal does not include the Sesame Street characters, such as Big Bird and Oscar the Grouch, who were sold earlier by EM.TV to the Sesame Workshop.

Negotiations between Disney and the Henson family continued about six months.

The Muppet characters already exist in Disney theme parks in a 3D film, while "Bear in the Big Blue House," is a long-running show on the Disney cable television channel.

"We have been very impressed by how the Disney company treats its own characters," Lisa Henson, who with her brother Brian, is co-chair and co-chief executive of The Jim Henson Co, said Tuesday.

"We feel if the Muppets are treated with as much care in the long term as Walt Disney's characters are, we will have properly served the legacy."

The deal includes a four-year consulting arrangement with The Jim Henson Co. to provide strategic advice on the use of the characters and a three-year production deal to develop movies, television shows and other projects using the characters.

The Jim Henson Co. will retain its "Creature Shop," which builds the puppet characters and provides special effects for other studios, as well as the rights to its film and television library, including "Fraggle Rock" and "Farscape," among others.

The announcement is a much-needed boost for Disney, which has been under attack for weeks from ex-board members and is the subject of a hostile takeover bid from cable television giant Comcast Corp.

It is also a coup for Disney chief executive Michael Eisner, who has been attacked by some who claim he lacks management skills.

"Michael Eisner's long-standing passion and respect for the Muppets gives me and my family even more confidence in Disney as a partner," Brian Henson said.

Munich-based EM.TV bought The Jim Henson Co. in February 2000 for $680 million in cash and stock. The company sold it back to the Henson family last July for $78 million in cash.
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Not a bad move at all for the big ME.

 

[JeffH]

Monorail expansion at WDW to...

Hey, this could be the perfect time and excuse to sink a lot of capital into extending the monorail from Epcot to MGM and onto AK (with extra stops at the International Gateway and Blizzard Beach)...it would create a great debt for an investor to have to absorb without the 'asset' to match it (since it would have to be built to be realized). Extending the monorail system would also link all the parks and make it harder for an buyer to sell off MGM and/or AK to help pay for the purchase. Although a lot of the Muppets purchase came with assets that could be sold off, the unrealized assets are what make it a good purchase (park rides, and future development)...but that's what would make an investment into the Monorail system the best thing they could do to scare off buyers a large 100% unrealized debt.
Of course, paying a lot for another decade of Pixar films would also be 100% unrealized debt (at least for the next 3 years).

 

[FantasticDisFamily]

A couple of points brought up here - specifically the why now timing ideas...link back to the thread on why won't ME just go.

That thread rightly concluded that ME isn't going to walk away on a low note, CEOs walk away willingly ONLY when they can do so on a high. I likened it to a SuperBowl win....

So what if ME is considering finally "consummating" the Muppet deal combined with "fighting off" a hostile takeover as enough of a SuperBowl win? While the Disney lovers on this and other fronts have been increasing their howl, as pointed out Wall Street hasn't necessarily been as vocal.

However, ME is now faced with his most serious threat in the form of an organized opposition. For all his failings he is NOT stupid when it comes to his own political position/reputation/etc. If he is getting at all nervous about the sharks in the water it would make much more sense for him to set up the perception of solid and successful moves in these last weeks before the stockholders' meeting and announce his retirement BEFORE the vote. Better for the ego...

Now I have NO source suggesting that this might be the case. Just speculation. But in part it is based on information that came through family members (who work in the industry and on occasion for Disney) about what is being planned in terms of the "show" for the stockholders' meeting, and a "recent" change in plans and increase in budget.....

Hmmm.....

Deb

 

[raidermatt]

If he is getting at all nervous about the sharks in the water it would make much more sense for him to set up the perception of solid and successful moves in these last weeks before the stockholders' meeting and announce his retirement BEFORE the vote. Better for the ego...

Hey, that sounds as plausible as most other scenarios I've seen. Eisner giving up, however, is just one of those things I'll have to see to believe. My only concern with this coming to fruition, however, is who the successor is. Because, as we all know, Eisner leaving is only half of the solution...

Buying the Henson organization would be foolish right now. Why would they want to take on that debt and overhead? .

Because in the long run it would be cheaper for them to "own" the talent rather than rent it.

I agree with the debt issue, however, taking on more debt is also a defensive tactic against a takeover.

Hey, this could be the perfect time and excuse to sink a lot of capital into extending the monorail from Epcot to MGM and onto AK

Now, THAT'S optimism!

Sidenote: One other thing needs to be remembered here. While Michael Eisner has been a villian on these boards and by Disney "lovers" for a long time, he hasn't generally been viewed this way by the rest of the world, including the wall st, investment types who ultimately make the (Disney) world go round (and are certainly in play right now)...

Ahh, yes, I agree. Which is why ISS coming out with a recomendation of "no" on Eisner is interesting. I've also seen a mutual fund manager say the same (link is on another thread).

Sounds to me like the opening chess move of the "poison pill" play, Disney starts buying up either rights or businesses (Echostar?) to make them actually go deeper into debt thus demanding a higher investment on Comcasts part.

A possibility... hence my questions about how much, and whether it was cash or charge...

 

[Mr D]

The Hensen deal was small change, about $60 million I hear.
Eisner needs a bigger fish, one or several quick acquistions of at least $10-15 billion .

Hopefully Echostar will be one, I lately am outraged that I cannot see one of my favorite shows anymore Smallville because its WB and our local UPN refuses to carry it (backwardsville Anchorage, go figure), also is the stupid congress bill passed that says if I can get local TV I cannot get other affiliates like east coast ABC, NBC, CBS.

I have learned that I CAN use Direct TV and get a better lineup with listings of UPN stations that carry Smallville because they do not plan on providing local channels, thats good cause our is nothing bu garbage, and I will trash the Dishplayer and the PVR (maybe I'll sell them) from Dishnetworks and change over to DirecTV.


Yeah Eisner, go ahead and buy Echostar.....

 

[raidermatt]

I didn't think it would be much (relatively speaking), as I thought Disney had earlier balked at about $110 million or so, and I think that included more than just the character rights.

In this case, I think its mainly for the PR benefit others have mentioned, with any debt being gravy.

Echostar, on the other hand...

 

[Geyser Gazer]

Disney and Henson declined to talk about the financial terms of the deal for the Muppets, but people familiar with the matter said it included a payment of between $40 million to $60 million plus a share of future Muppets profits.

 

[raidermatt]

...plus a share of future Muppets profits.

Uh oh.

Hope they do a better job with the contract than they did with the Pooh contract.