ANIMATION WORLD MAGAZINE - ISSUE 5.01 - APRIL 2000

Business

EM.TV already has plans to bring back The Muppet Show to TV. Courtesy of the Disney Channel. © Jim Henson Productions.
Will Bear like his new big blue house in Germany? Courtesy of the Disney Channel. © The Jim Henson Company.

German EM.TV Acquires The Muppets. Munich-based EM.TV & Merchandising has acquired the Jim Henson Co. in a cash and stock transaction valued at US$680 million. The German company now owns the rights to the Muppets and Sesame Street characters. The purchase gives EM.TV "some of the most powerful and enduring kids and family brands worldwide and. . . access to the world's biggest and most important media market," said Thomas Haffa, EM.TV CEO. "In addition, our investment in Henson will give us a position in cable networks, which will open up new distribution channels for our own brands." EM.TV currently supplies 330 hours of programming to Disney Channel Germany; offers classic Warner Bros. and Hanna-Barbera toons in a Saturday morning program called Junior.TV, and holds the German rights to The Simpsons. Former president and CEO of Jim Henson Co., Brian Henson, will remain as a chairman. "I will be able to devote my energies to my first love, which is driving the creative and technological forces of the company," Henson explained. Charlie Rinkin, the current COO of Jim Henson, will assume the role of CEO. This deal comes on the heals of Jim Henson Co.'s purchase of the famed Charlie Chaplin Studios in Hollywood, California as their new headquarters.

Vivid Animation Stops Production. Jeff Lotman, CEO of Vivid Animation and Virtual Celebrity Productions, announced that the company has closed operations. "Vivid, which had just completed its first commercial project, for MasterCard, will no longer accept commercial projects," said Lotman who has decided to focus all of his energies and resources on his two-year-old licensing and merchandising company Global Icons. "Global Icons is growing faster than I had hoped and the potential is so great that it demands all of my attention at this time." Global Icons is a licensing and merchandising company specializing in promoting classic celebrity and corporate images such as: George Burns and Gracie Allen, Milton Berle, James Cagney, Bing Crosby, Sammy Davis, Jr., Marlene Dietrich, Clark Gable, Bob Hope, Burt Lancaster, Carole Lombard, Vincent Price, Donna Reed, Edward G. Robinson and Natalie Wood. Lotman plans to develop animated programs through Bird Dog Productions, which recently sold a live-action film to New Line, entitled To Err Is Human.

Shareholders File Lawsuit Against CINAR. On Wednesday, February 23, 2000, CINAR Corp., the creator of the Emmy Award-winning Arthur, had a lawsuit filed against the company alleging they artificially inflated its financial results by lying about the use of Canadian tax credits. As reported [AF 10/19/99], allegations surfaced last fall that CINAR only pretended to use Canadian authors for its scripts in order to obtain tax credits. Canadian officials are investigating but no charges have been filed. The early rumors sent CINAR stock plummeting to nearly half of the company's market value. At first CINAR said the allegations would not have any material impact, however on Friday, February 18, the company warned investors the impact would be more severe than first thought. By close of the Monday stock exchange day, CINAR's stock had dropped nearly 23%. CINAR's class B shares were CA$8.25 lower at CA$28 on the Toronto Stock Exchange at mid-day on Monday, while on the Nasdaq, they were down 1-1/4 at 24-5/8 in mid-day trading. The announcement quickly prompted Milberg, Weiss, Bershad, Hynes & Lerach, a New York law firm representing disgruntled shareholders, to file suit against the Canada-based company. The lawsuit also alleges CINAR raised more than $150 million through equity financing in the last 12 months, "without disclosing. . . .the adverse facts." CINAR's officials said they intend to fight the lawsuit "vigorously." The company has already said it did not expect its tax-credit imbroglio to cripple its financial strength or liquidity. On Thursday, CINAR's shares were unmoved at $18-7/8 on the Nasdaq, and down CA$0.25 at CA$26.75 on the Toronto Stock Exchange.

EA Acquires DreamWorks Interactive. Electronic Arts, one of the world's largest interactive entertainment software companies, announced the acquisition of multimedia developer DreamWorks Interactive, LLC. In terms of the deal, DreamWorks Interactive will become a complete subsidiary of Electronic Arts. Financial terms were not disclosed. Formed in March 1995 as a joint venture between Microsoft and DreamWorks SKG, DreamWorks Interactive has produced such PlayStation titles as Lost World: Jurassic Park and Medal Of Honor. Steven Spielberg, who engineered the creation of DreamWorks Interactive, said, "We have been extremely pleased with the working relationship that has developed over the past two years with Electronic Arts. EA brings world-class production processes, strong global distribution and an unmatched marketing infrastructure to add to DreamWorks Interactive's top-notch creative talent." EA's President of Worldwide Studios Don Mattrick said, "DreamWorks Interactive is a gifted creative team, with an impressive portfolio of innovative interactive entertainment titles. We're very excited about bringing this team to EA and helping them develop the next generation of titles."

Disney's Go A Sleeping Giant. On Tuesday, February 22, 2000, Disney chairman-CEO Michael Eisner made the announcement: "With Go.com, I believe we are now the sleeping giant of the Internet. Once streaming video is commonplace," he added, "Disney is ready with a vast library and the ability to create new content." Added Go.com chairman Steve Bornstein: "I see a time, in the next few years, or even sooner, where nobody will talk about television or the Internet separately. They will become one synergistic, fused media." In scheduled business, shareholders re-elected 10 company directors Tuesday and rejected two proposals -- one to consider reducing executive salaries and discontinue bonuses, and another to create an election contest for each seat on the board. The remarks were made at Disney's annual shareholders meeting in Chicago which some 3,000 shareholders attended. They were shown the opening clip of animated picture Dinosaur, which Eisner predicted "could be the big event for Memorial (Day) weekend with major implications for our entire company." He also promoted the upcoming holiday film The Emperor's New Groove, a South American-set comedy formerly named Kingdom In The Sun. Disney has implemented cost cutting measures on the film side with a smaller slate, lower production budgets, a consolidation of operations, fewer talent deals and the trimming of overhead. The studio cut costs by $500 million in the past few years. The company expects that its cost-cutting measures will save it about $500 million per year starting in 2001. In addition, the company touted its growing theme park empire. California Adventure opens in 12 months, while Tokyo DisneySea is scheduled to launch in 18 months, just across from Tokyo Disneyland. In two years, a Disney Studios park will open at Disneyland Paris. The ambitious Hong Kong park comes on board in 2005. Execs foresee revenues close to US$2 billion from the attractions division between 2002 and 2003.

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