Interactive software developer and distributor THQ Inc. has completed its acquisition of digital entertainment creator Rainbow Studios by issuing 858,203 shares of common stock. These shares are subject to adjustment pending the determination of Rainbow's net book value. THQ also assumed existing Rainbow stock options providing for the further issuance of 106,259 shares of THQ common stock. Rainbow Studios is now a wholly owned subsidiary of THQ. Mark DeSimone and Tony Sutterheim will continue to manage Rainbow Studios as president, games and president, animation, respectively.

Iwerks Entertainment Inc. and Toronto-based SimEx Inc., have had their previously announced merger approved by Iwerks shareholders. When the merger is completed, Iwerks will become a wholly owned subsidiary of SimEx Inc. and cease being traded on the OTC Bulletin Board. The merger was expected to close December 28, 2001 but did not, and no new date has been set. Iwerks and SimEx continue to discuss the merger and related activities. Iwerks Entertainment Inc., founded in 1986, is the number one provider of 8/70 Large Format Theater systems worldwide and the industry leader in ride simulation.

Independent animation studio Mercury Filmworks recently opened a full feature and episodic television production facility in Toronto, Ontario. The expansion has nearly doubled the company’s studio capacity and increased its talent to 120 employees in Vancouver and Toronto. A deal with Nelvana Limited to work on a 13-episode season of RESCUE HEROES II allowed Mercury the resources to open the Toronto location. Mercury successfully wrapped the RESCUE HEROES II series at the end of October 2001. The series airs on Teletoon in Canada and Kids’ WB! in the U.S.

FrameStore, specialists in visual effects and computer animation for commercials, film and broadcast television, and Computer Film Company (CFC), renowned for its award-winning digital film effects, as well as pioneering development in digital film, have merged. The newly rebranded company is named Framestore CFC and will be led by a single management team, headed by joint chief executives Sharon Reed and William Sargent. The 240 staff positions and the senior management team remain unchanged.

Design and production studio Charlex has formed a 3D department, adding new equipment and creative talent to the company’s existing setup. Bryan Godwin, formerly of Blue Sky Studios, heads the new team of 3D artists -- who bring extensive experience in the worlds of feature film and videogame production. The new group has recently completed a holiday spot for AT&T, and two spots for Sunny Delight.

TV-Loonland has formed an alliance with Artists Management Group’s Animation & Family Entertainment Department to produce a minimum of four animated television series over the next three years. Artists Management Group (AMG), co-founded by Michael Ovitz, Rick Yorn and Julie Silverman-Yorn, represents many well-known talents in the animation arena including RUGRATS creators Paul Germain and Joe Ansolabehere, director Henry Selick (THE NIGHTMARE BEFORE CHRISTMAS) and animation studio Film Roman.

Lego Company Signs Co-Publishing Deal With Electronic Arts. Entertainment software company Electronic Arts (EA) has inked a deal with the privately owned LEGO Company where EA will co-publish and provide marketing support for more than 30 LEGO software titles on a minimum of four platforms over a three-year period. LEGO Company and EA will create software targeted to young gamers, while building current franchises and establishing new ones. Current franchises include: LEGO RACERS, BIONICLE and GALIDOR: DEFENDERS OF THE OUTER DIMENSION. Financial terms of the agreement were not disclosed.

NBC has confirmed it will lease its Saturday morning block to Discovery Networks, beginning in fall 2002, reported VARIETY. Discovery is reportedly putting up $18 million for a three-year contract. "This is a strategic move to keep NBC competitive in the kids arena," explained NBC West Coast president Scott Sassa, who said that without a weekday platform, it was difficult to promote the Saturday morning block. The block is currently 2 and 1/2 hours of programming, and will be jointly branded by Discovery and NBC.

Los Angeles-based design studio B1 Media has launched a games division, B1/Games, and hopes to develop products for set-top game consoles. B1 Media has primarily been a provider of interactive design for DVDs and has created games and interactive content for numerous DVD titles like DINOSAUR, UNBREAKABLE, THE SIXTH SENSE and PLANET OF THE APES. The company also recently launched a broadcast design division, B1/Broadcast.

R!OT and Liberty Livewire LLC's Interactive Services Group, both units of Liberty Media Group, have launched a joint venture aimed at developing interactive television applications. Under the plan, R!OT will link its broadcast post-production services with the Interactive Services Group's Web authoring, data management and e-commerce services. As part of the new venture, Liberty Livewire's Interactive Services Group has relocated its creative staff to the R!OT campus in Santa Monica.