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German firm gets Muppets
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February 21, 2000: 5:18 a.m. ET
Children's entertainment enterprise to buy The Jim Henson Co. for $680M
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NEW YORK (CNNfn) - The German television company EM.TV agreed Monday to buy The Jim Henson Co., creator of "The Muppet Show" and all the "Sesame Street" characters, for $680 million in cash and stock.
The deal culminates a 42-year run during which Los Angeles-based Henson Co., largely under the guidance of its creator and namesake, became one of the world's best-known independent children's entertainment production companies, creating Kermit the Frog, Miss Piggy, Big Bird and other popular characters.
See the Muppets in action (1MB Quicktime Movie)
For EM.TV, an 11-year old European programming powerhouse that holds the German marketing rights to everything from the popular Pokeman characters to Bugs Bunny, the deal offers immediate access to the United States, the world's largest media market, and the global rights to the Sesame Street and Muppet characters.
"The Henson Co. has been a unique part of U.S. pop culture that in so many ways transformed children's entertainment," said Bryant Jennings, director of the Institute for Communication Research at the University of Georgia and a former executive at the Children's Television Workshop, who worked with Jim Henson on the early production of "Sesame Street."
"They are probably as good of a company to translate internationally as it gets," Jennings said.
The agreement calls for EM.TV & Merchandising to pay $340 million in cash and give the Henson Co. a 5 percent stake in the combined company. Brian Henson will step down as the company's chief executive officer following the merger, but will retain his title as chairman. Rivkin will assume the role of CEO.
The deal ends several months of effort by Henson executives to find new ways to fuel the company's growth.
Since the death of its founder, Jim Henson, in1990, the company has been run by Henson's son, Brian, and other members of the Henson family. Shortly after Henson's death, rumors held that the company was on the verge of being sold, with the Walt Disney Co. (DIS: Research, Estimates) named as one likely suitor. However, no deal ever materialized.
"It had some fits and starts after Jim left and I don't think they had the same level of creativity, but I still think they did great work," Jennings said.
In addition to its continued work with "Sesame Street," Henson Co. has delved into new areas in recent years, including creating "Bear in the Big Blue House," one of the most popular children's shows on German TV.
Henson also helps produce the television series "Farscape" and has participated in several motion picture productions, including Disney's "101 Dalmatians" and 20th Century Fox's "Dr. Dolittle." But with the media and entertainment industry rapidly consolidating, company executives said they believed a merger would best ensure the company's long-term viability.
Enter EM.TV, which, like Henson, is largely a family-run operation with Chairman Thomas Hoffa and his brother, Florian, controlling more than half the company's stock. Since going public three years ago, EM.TV's stock price has appreciated more than 33,000 percent.
"In short, we want to position The Jim Henson Co. for continuing
and growing success in the next 42 years, and beyond," Brian Henson and company President Charles Rivkin said in a letter sent to Henson employees Monday. "What we saw in EM.TV ... was exactly the international strategic, financial, marketing and distribution partner we have been looking for."
Henson officials said the company will retain its creative control of its operations after the merger, while working with EM.TV to pursue global business opportunities. No layoffs are expected as a result of the merger.
The deal will give the German company, the world's market leader in children's and family programming, worldwide rights to the massive Henson library, which includes more than 453 hours of programming, including television movies, Muppet Show specials, Fraggle Rock episodes and numerous Muppet movies.
Henson also holds a 12.5 percent stake in the Noggin Channel, a joint venture between Nickelodeon and Children's Television Workshop, the producer of "Sesame Street"; the Noggin Channel also produces "Bear in the Big Blue House."
"By acquiring the Jim Henson Co., we gain some of the most powerful and enduring kids' and family brands worldwide and get access to the world's biggest and most important media market," said Thomas Haffa, chief executive and founder of EM.TV. "In addition, our investment in Henson will also give us a position in cable networks which will open up new distribution channels for our own brands." 
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