Disney Set to Bid for Muppet Parent Henson--Sources

[Thog]

http://abcnews.go.com:80/wire/Entertainment/reuters20021219_279.html

 

[Phillip]

Here's the full text in case anyone has trouble seeing the article...

Disney set to bid for Muppets
Courtesy of Reuters
December 18, 2002

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.

"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 the company as a matter of policy does not comment on speculation regarding acquisitions.

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 cashflow 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, for which it spent $5.2 billion, including $2.2 billion of debt. Earlier this year, Disney cut about half the workforce 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.

According to people familiar with the situation, the other four parties mulling bids for Henson are London-based Entertainment Rights; privately held Classic Media; billionaire investor Haim Saban; and Dean Valentine, the former chief executive of United Paramount Network.

None could be reached for comment.

 

[Bean Bunny]

Do the Happy dance! Do Da Do Da Do Da Do!
Okay, I am done for now.

 

[Luke]

Whatever way it goes, it is much more likely now that the sale will not happen this year - it definitely isn't a forgone conclusion that the company will go to Disney, the rumored bid isn't that much more than Sabans and Disney will still have to do various legal things with Allen and Co to be able to actually bid at all. That is if this article is 100% accurate - this site seems to go from news article to news article as if this is the real news that is actually happening - all of these articles are speculative and usually very far from being completely accurate. It's just one journalists view and their sources aren't always right or may sometimes have other reasons for saying something.

 

[jeremyactor]

I'm prepared to bid on the Muppets. I'll give EMTV $100 and 3 blockbuster rental coupons (but they'd better hurry, they expire at the end of the month.)

But seriously, I think if all the bids are about equal, Disney will win- I think Jim Hill was right.

Jeremy

 

[murgatoad]

"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."

If that.

It's hard to believe that Disney, given its troubles over the "Treasure Planet" disaster and the only *slightly* improved performance at ABC, would be interested in shelling out cash for Henson. There's something going on behind the scenes IMO. Anyway, if Disney does buy the Muppets, Eisner is going to have a tough time with his shareholders...

 

[Luke]

Originally posted by murgatoad
There's something going on behind the scenes IMO. Anyway, if Disney does buy the Muppets, Eisner is going to have a tough time with his shareholders...

I agree ..... i'm wondering if someone outside of the companies has leaked this to try and drag Disney into the battle - it would suprise me if they bid against Saban. Unless the plan is for Saban to drop out at the last minute and Disney to go forward with a lower offer - most of the other companies mentioned in the sale don't have the capital to make a bid above $80 million. It would leave Disney a clear run if EMTV had to make that loan payment quickly. Saying that though, i'm still not convinced that Disney is anywhere near that strong a contender - i've heard very little Disney talk in connection with the sale.

 

[Zack the Dog]

the company's staff is bloated and it needs an infusion of capital to restore the brand to its former glory, sources said.

BLOATED?!?! what do they mean by that? lol i laughed when i read that, it makes it sound like the staff needs some Pepnobismal.(Sp?)

Hmm, this news scares me, can't thinks just driffed another year or so?;-) i know it's been long enough, but I mean we have got a lot out of this year so far, and don't want Disney to rip it all apart.


Zack)Rowlf the Dog.

 

[murgatoad]

Originally posted by Luke
I agree ..... i'm wondering if someone outside of the companies has leaked this to try and drag Disney into the battle - it would suprise me if they bid against Saban. Unless the plan is for Saban to drop out at the last minute and Disney to go forward with a lower offer - most of the other companies mentioned in the sale don't have the capital to make a bid above $80 million. It would leave Disney a clear run if EMTV had to make that loan payment quickly. Saying that though, i'm still not convinced that Disney is anywhere near that strong a contender - i've heard very little Disney talk in connection with the sale.

I think that's an excellent analysis. Know what I think? I think Disney is doing a little public maneuvering. It's telling Henson via the press, "Look, you're not going to get any better than $135 million from us, you'll get far less from anybody else, and even then your assets are worth only $80 million, so we're offering far more than you're worth. Better think about our offer and think hard."

Businesses do this kind of thing all the time. ****, Henson has done it - back when Disney and Henson were first haggling over the company, Henson planted all sorts of stories in the press about how *mean* Disney was being to them. Disney, of course, didn't appreciate that and that was one reason the sale fell through. One other reason was that the Henson kids were a). clueless and b). greedy. (And of course the third reason was Disney's belief that the company couldn't survive long anyway without Jim).

BTW - about the "bloated" staff at Henson. It's actually, as many of us know, down to the bare bones. Disney could be saying that many of the staffers are inefficient, unproductive, and *stupid* (with which opinion I heartily agree) and could be planning to fire them if it buys the company. Trouble is, how much of a staff would be left?

 

[Bean Bunny]

On the plus side, they get access to Disney Marketing, Parks, ABC, EPSN, Bueava Home Video, Disney Magazine group, Disney Internet group ( hey, maybe they could update Henson's site), Mcdonalds and Hasbro relationships and others.

Disney can use such shows as The Hoobs for new programming for Playhouse Disney.