Budapest, Hungary-based Varga Studio is working on a new, stop-motion animated special, "Don Quixote de La Mancha," based on the classic novel by Miguel de Cervantes. The 30-minute program has been in development for two years, and is now being co-produced with S4C, HBO America and BBC for Spring 1999. The stop-motion materials used--metal skeletons with rubber and clay heads--were developed by studio founder Csaba Varga, who will assume the role of director for the first time since his 1993 short, "Beasts."