On Monday, May 22, 2000, The Walt Disney Co. announced that its majority-owned Toysmart.com has gone off-line. Disney purchased 60% of the e-commerce site for educational toys in August for an estimated US$50 million. Disney execs, which made up 3/5s of the board, decided to shut down operations after a new round of financing was denied. One hundred-ten of the remaining employees were laid off. In April, 205,000 Web surfers visited the site compared to 1.3 million for Toysrus.com and 1 million for EToys said Media Metrix.
The former owners of Cinars subsidiary, HighReach Learning, Inc., have filed a lawsuit against the parent company to recover alleged losses related to a stock purchase agreement concluded with Cinar as part of the purchase price of HighReach in 1998. The complaint contains allegations that Cinar is liable for losses in stock due to the ongoing investigation into their alleged fraudulent actions. "These legal proceedings pertain to circumstances surrounding the stock purchase agreement negotiated between Cinar and the former owners of HighReach Learning in 1998.
The Harvey Entertainment Company announced that its first quarter income has improved nearly 25% over last years results. Net operating revenues improved to US$882,000 in the first quarter of 2000, compared to $562,000 in 1999. Harvey saw a reduced loss from operations of $598,000 in the first quarter of 2000, compared to a loss of $2,412,000 a year ago. These figures do not include the CASPER owners recent purchase of PM Entertainment.
Marvel Enterprises and Artisan Entertainment have entered into a joint venture that will send 15 Marvel superhero characters to Artisan for feature, TV, direct-to-video and Internet programming. Both companies will share in the money made from the properties and tied-in merchandising. Each company will own the programming library.
Time Warner chairman, Gerald Levin, announced that the company has reached a "agreement in principle" with Disney about the carrying of Disney cable stations on Time Warner operating systems. The recent dispute over the price Time Warner would pay for the cable networks led to Time Warner aggressively pulling ABC from its cable system. This action quickly drew heat from regulators and the public, who had service interrupted during sweeps week specials of WHO WANTS TO BE A MILLIONARE?
As anticipated, Marvel's net sales decreased over last years first quarter period due in part to film licensing revenue. The year-ago quarter included a non-refundable advance from Sony Pictures Entertainment for the feature film license of Spider-Man, as well as an advance from Universal Studios for a feature film based on The Hulk. Also, year-ago first quarter revenues reflected strong initial distribution shipments for the Toy Biz divisions new line of World Championship Wrestling (WCW) products.
The continuing tribulation around the merger of Time Warner and America On-line now includes impending separate fines looming over the two firms. The Los Angeles City Attorneys Office and Information Technology and General Services Committee are looking to the recent dispute between Disney and Time Warner, which resulted in Time Warner pulling ABC from its cable service. The move affected some 400,000 subscribers for 36 hours, which included the sweeps week celebrity broadcast of WHO WANTS TO BE A MILLIONARE.
Nelvana Limited announced that it has filed with the Ontario Securities Commission to offer 3.75 million subordinate voting shares of the company in the U.S. and Canada. A portion of the money gained from the new offering will be used to repay loans for the purchase of Klutz Publishing, a leading U.S. childrens book publisher. The remainder of the funds will be used to pay off borrowings under the firms credit facilities. The producer of children favs BABAR and FRANKLIN is selling 3,684,032 shares and the remaining 65,968 shares are being sold by two unnamed shareholders.
Quebec Animation, an alliance of animation companies in Quebec, announced that Oscar award-winning Productions Pascal Blais has joined the group. Productions Pascal Blais THE OLD MAN AND THE SEA recently won the Oscar for best animated short. Formed in 1999, the organization highlights the creativity and mastery in animation and visual effects of its members, while each company stands as an independent entity. "The rise of Montreal as an internationally recognized shooting center in the past ten years has been impressive," said Pascal Blais, President of Productions Pascal Blais.
A Canadian Television Fund (CTF) commissioned report calls for stiffer conflict-of-interest rules for the distribution of their CA$200 million in funds. Two reports, one by consultants François Colbert and David Silcox for CTF and one by KPMG for the Heritage Ministry, pointed out several serious administrative problems in the way Canadian funds are handed out to production companies. Both reports recommend that Telefilm Canada, a second government agency that helps fund and produce Canadian productions, should get out of the funding business and concentrate on producing feature films.
Cinar has been quiet about an internal investigation looking into the use of company funds to renovate the co-founders Montreal home. No comment, was all Suzan Ayscough would give the press about co-founders Micheline Charest and Ronald Weinberg using almost CA$500,000 (US$348,000) of company funds to touch up their home without the knowledge of the board of directors. In March, Charest stepped down from her positions as co-CEO and chairman and Weinberg left his post as president and co-CEO.
Independent film producers are calling foul over the amount of funds going to Quebec. French-language productions are guaranteed at least a third of the CA$200-million a year provided by the Canadian Television Fund (CTF) and Quebec-based film companies this year are receiving nearly 40% of the federal funds. Another sore point is that in years past Cinar Corp., the Montreal-based producer of childrens series, has received as much federal funding as the entire Alberta industry. Currently, Cinar is under investigation for using false Canadian names on scripts by U.S.
Station X Studios Project: Messiah 3D animation development team, composed of Station X president and co-founder Fori Owurowa, Station X co-founder Dan Milling and software developer Lyle Milton, have spawned a new Santa Monica-based visual effects production facility. The yet-to-be-named new companys business plan is to enhance and expand the character animation tools introduced with Project: Messiah at SIGGRAPH 99. The new production house will keep close ties to Station X and the three principals will remain shareholders.
Canadian securities watchdog, the Ontario Securities Commission (OSC), has barred officers, directors and insiders of Cinar Corp. from trading in shares of the troubled children's television production company. OSC issued a temporary cease-trading order against 57 Cinar individuals as a result of the Montreal-based company's failure to meet regulatory filing requirements. On April 18, 2000, Cinar missed the deadline of filing the results for the year ended Nov. 30, 1999.
Humongous Entertainment, a leading publisher of children's entertainment products, announced a donation of US$228,000 to the Make-A-Wish Foundation, the largest wish-granting organization in the world. The donation was the result of a specially created holiday promotion appearing on 16 of Humongous Entertainment's popular children's CD-Roms. With more than 105,000 holiday consumers participating, this promotion became the largest rebate program in the company's history.
Mexico City-based Ollin Studio has opened a new office in Toronto, Canada. The animation and post-production studio's new facility will offer computer animation, post-production, Internet and multimedia services. Ollin Studio is one of the top animation, post-production, Internet and multimedia houses in Mexico. Ollin has brought high quality animation/post-production to the Mexican market and hopes to do the same in North America. The company's international business representative in Canada is Jose Luis Monzon.
Harvey Entertainment Company announced that The Chase Manhattan Bank is arranging a US$25 million, five-year revolving credit facility and that Harvey has completed the acquisition of 100% of the capital stock of PM Entertainment Group Inc., an independent entertainment production and distribution company. The PM Entertainment Group purchase consisted of $6.5 million in cash and $1.45 million in Harvey Entertainment Common Stock paid at closing, as well as a $2.05 million subordinated note, payable over the next five quarterly periods.
The Royal Canadian Mounted Police (RCMP) filed their first documents in the CINAR Corp. tax fraud case. According to the report CINAR received at least CA$7.8 million (US$5.4 million) in Quebec provincial tax credits by allegedly placing false Canadian names on scripts written by U.S. writers to receive tax credits. In the report, RCMP says that several executives, including former co-CEO and co-founder Ronald Weinberg, asked former CINAR employee Thomas Lapierre to create subcontracts that would be used to pay U.S. scribes.
GT Interactive Software Corp. announced that in an effort to boost its Humongous Entertainment children's software division, it would fold the company's existing operations into the GT Interactive arm. The New York-based gaming company will adopt a unified corporate direction, similar to that of GT Interactive's majority owner Infogrames Entertainment. Infogrames hopes that the new arrangement will increase shareholder value and produce a re-energized company.
Time Warner Inc. reported operating income before amortization of intangible assets (EBITA) of US$1.17 billion on revenues of $6.55 billion for the first quarter of 2000. In the first quarter of 1999, EBITA was $1.24 billion on revenues of $6.09 billion. EBITA grew 13% for the first quarter when normalized for certain items described below affecting the comparability of operating results. Revenue grew 8% for the quarter on a normalized basis.
On Wednesday, April 12, 2000, Nelvana Limited announced it has acquired privately held Klutz, one of the leading branded children's book publishers in the U.S., for US$74 million. The Toronto-based company plans to integrate Klutz into Nelvana's Branded Consumer Products business, which includes established operations in publishing and merchandise licensing. Under the terms of the agreement, Nelvana will acquire 100% of the stock of Klutz.
An event has happened that comic book fans have been debating over late night games of Dungeons and Dragons for decades -- What would Batman be like if Stan Lee created him? DC Comics announced the teaming of living legend Stan Lee, the co-creator of Spider-man, the Hulk and the X-Men and founder of Stan Lee Media, with longstanding rival DC Comics to present Lee's alternative interpretation of such super-heroes as Batman and Superman.
Stan Lee Media, Inc. (SLM) announced a strategic alliance with Canadian-based Toon Boom Technologies for the development of Web-based animation software, which SLM will utilize in constructing its episodic Web comics. Jamie Wilkinson, executive vice president, Internet strategy for SLM, will oversee Beta testing in late summer/early fall 2000, to take place in Montreal and at a number of animation houses throughout the world. Pentafour Software & Exports Ltd., a leading developer of 2D/3D graphics and animation, special effects and software, will also participate in the project.
PuppetTime, Inc. and Prosoft Engineering, Inc. announced a strategic development partnership that will provide PuppetTime with access to Prosoft's engineering resources to accelerate the development of PuppetTime's patent pending Web 3D storytelling technologies.
Canadian-based TV and film company Alliance Atlantis Communications and Munich-based kids producer TV Loonland have joined to create animated joint ventures. The German producer will supply CA$110 million (US$ 76 million) over the next three years to co-create up to nine new children's series. As part of the deal, TV Loonland will hold all European rights, while Alliance will control the remaining worldwide rights. For an additional $14 million, TV Loonland has acquired European rights to Alliance's portfolio which includes YVON OF THE YUKON.