Activision, Inc. has exercised its option to acquire the remaining 60% equity interest in Gray Matter Interactive Studios. Under the terms of the agreement, Gray Matter Interactive Studios will become a wholly owned subsidiary of Activision. Activision issued 133,690 shares of common stock in connection with the acquisition. "Gray Matter has a very talented team of programmers, designers and artists and we are confident that the studio's development strengths will further establish Activision as a leader in the PC action genre," stated Ron Doornink, president and COO of Activision.

Iwerks Entertainment Inc. and Toronto-based SimEx Inc., have confirmed the completion of their previously announced merger. Iwerks is now a wholly owned subsidiary of SimEx Inc. The merger was made final on January 9, 2002. Pursuant to the terms of the merger, each share of Iwerks' issued and outstanding common stock, other than shares held in its treasury, was cancelled and automatically converted into the right to receive approximately $0.63 in cash, without interest. On the effective date, Iwerks had 3,554,301 shares of common stock issued and outstanding.

Independent animation studio Wild Brain, Inc. has signed a co-production and development deal with Denmark's Egmont Imagination. The first co-production between the two companies is a 26 x 30' CG-animated series VANILLA PUDDING. The series will feature a quirky little girl who imagines herself as a superhero to handle the trials and tribulations of growing up. VANILLA PUDDING was created by in-house Wild Brain director Nicholas Weigel, with the pilot script penned by Emmy Award winner Sherri Stoner (TINY TOONS, ANIMANIACS, CASPER).

Nelvana has acquired exclusive worldwide rights to produce a television series, made-for-video programs, theatrical motion pictures, and individual programs including made-for-television specials and movies, based on THE BERENSTAIN BEARS. Nelvana has already secured a relationship with Columbia Tristar to distribute THE BERENSTAIN BEARS videos in the United States; the first release is slated for 2003. In addition, Berenstain Enterprises, Inc. granted Nelvana worldwide merchandising and licensing rights.

Troubled German media company EM.TV’s new CEO Werner Klatten is close to closing the previously announced purchase of a 25.1% stake (approximately 36.2 million shares) in the company from founder and former president Thomas Haffa. Klatten is working with a venture capital firm to secure financing for the deal, which is scheduled to be completed by the end of January 2002. The acquisition is currently estimated at US$60 million.

Scholastic Corporation has acquired Tom Snyder Productions from Canadian-based publishing company Torstar Corporation for US$9 million. Included in the purchase is the company’s television animation production division Soup2Nuts, producers of Comedy Central’s DR. KATZ and Cartoon Network’s HOME MOVIES. Tom Snyder Productions, a leading developer and publisher of award-winning educational software will be part of the interactive educational software division reporting to Margery Mayer, executive vice president of learning ventures.

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.

Apparel brand and licensing company The Cherokee Group has agreed to represent DIC Entertainment's property LIBERTY'S KIDS and engineer strategic licensing agreements for the animated show. LIBERTY'S KIDS, an educational series depicting the events and people surrounding the United States' fight for independence, will debut in the fall of 2002 on PBS. The show will be airing a minimum of five days a week for two years. The series will feature personalities such as Walter Cronkite, Dustin Hoffman, Ben Stiller and Whoopie Goldberg in voice-over roles portraying historical figures.

Mattel Inc. and 4Kids Entertainment Inc. have signed a multi-year, worldwide licensing agreement, with the exception of Asia, naming Mattel the master toy licensee for 4Kids' YU-GI-OH! Mattel will be manufacturing and marketing, among other items, action figures, games, puzzles, role-playing products and youth electronics based on the animated property. The first YU-GI-OH! product line will be available in 2002.

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.

In an interesting promotional partnership, Universal Studios Home Video (USHV) and Hop-On have partnered to launch the first-of-its-kind, disposable cell phone in connection with the DVD/home video release of JURASSIC PARK III on December 11, 2001. The "Jurassic Park Survival Cell Phones" will offer 60 minutes of prepaid calling time without the requirement of a cellular service contract or monthly fee and will be available only via inserts in thousands of JURASSIC PARK III DVDs and videocassettes. Compact and fully recyclable, the cell phones require only two buttons: CALL and END.

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.

Toonz Animation India has acquired Toonsense Studios in Mumbai, India. Focusing on the creation of traditional animation for the advertising community Toonsense Animation Studios has created animation for dozens of diverse television commercials, combining traditional animation with live-action and computer graphics. Toonsense founders Suhael Merchant and Shrirang Sathaye will remain with the company.