Muppets get new maestro
EM.TV's price for Henson biz not disclosed
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A price for the sale, fronted by Europlay Capital Advisors, was not disclosed. Rival bids for 100% of the company reportedly had been in the range of $125 million-$135 million.
Europlay, Valentine and his partners -- former Buena Vista TV prexy Mort Marcus and ex-Artisan Entertainment exec VP Nick Van Dyk -- will now enter an exclusive negotiating period with EM.TV.
EM.TV chief financial officer Andreas Pres told Daily Variety that maintaining equity control of Henson was an important criterion in its choice of suitors.
"We're only selling to meet the obligations to our bankers," he said. "We still believe in the original idea of creating a transatlantic kidvidder. We may not have had the best management in the past, but with the new team we're getting a fresh start."
EM.TV, which acquired 100% of the Muppet parent company in 2000 for $680 million, will remain the majority shareholder with 50.1% of the equity (crucially allowing it to consolidate its earnings), though day-to-day management issues will be subject to final negotiation with the buy-in team.
Under the terms of the deal, EM.TV will continue to handle all international distribution of Henson properties.
The Muppets remain Henson's bread and butter, but the company has branched out in recent years in TV (Sci Fi Channel's "Farscape"), film, interactive and home entertainment.
Company also publishes a range of children's books and operates Jim Henson's Creature Shop, a digital and physical visual effects firm that regularly services the international film, TV and advertising industries.
The race to bid on Henson had intensified in recent weeks, as observers waited to see whether the Walt Disney Co. would step up and make a play for Kermit, Miss Piggy and company. At one point, Disney was apparently interested in making a $135 million bid for Henson.
But it's believed now that Disney never came across with a formal offer.
While the Valentine/Europlay bid has risen to the head of the pack, bankers running EM.TV's auction have also signed letters of intent with a number of other potential bidders, including a Haim Saban-led group (partnered with investment firm Evercore), which made a cash bid of an estimated $127.5 million.
New York-based children's entertainment licensor Classic Media is also believed to have secured a letter of intent at one point.
Should negotiations result in an agreement between EM.TV and the Valentine/Europlay group, the parties hope to have a sale in place sometime in January.
EM.TV has a little more breathing room now that lenders have given the company another 30 days to complete a debt payment. EM.TV needed to conclude the auction by the end of the year in order to cover the $65 million loan.
As for the Valentine/Europlay bid, Valentine said he believes there's an opportunity to better exploit the company's Muppet franchises.
"Everyone in the world knows who Kermit is and what Henson is," he said. "The company has obviously had some corporate difficulties for the last decade, for a number of reasons. It's been sold and resold. Because of that, it hasn't had the chance to have these characters come back to life in the way they can."
Valentine pointed to the recent NBC telepic "It's a Very Muppet Christmas Movie," which performed solidly for NBC in November.
"You realize these characters are far from tired or depleted," he said.
Beyond the Muppets, Valentine likened Henson's state to Disney's in the late 1970s and early '80s before it branched out and became a true major.
Thirtysomethings who grew up on "The Muppet Show" and their children are an untapped audience, he said. In the same way, Disney was able to refocus and target baby boomers in the mid-'80s.
"We'd like to broaden the Henson brand to be more than Muppets, to enter other franchises," he said. "It's really the family entertainment marketplace we're looking at as a whole.
Valentine and Marcus worked closely together at Disney, where Marcus headed the syndication division while Valentine was in charge of network production as prexy of Walt Disney TV. Van Dyk left Artisan in June 2002 after a five-year stint as one of its top operating and financial managers.
"We knew it was important this time to have American management in the company, and this team has a strong track record," EM.TV's Pres said.
Pres wasn't prepared to outline specific spending plans for the company, but emphasized the goal was to expand the brand and work quickly to restore the producer-distributor to profitability as early as possible.
Auctioneer Allen & Co. has been handling bids for EM.TV, which has been rebuilding after a disastrous buying binge and financial scandal in the late 1990s. Though the company has been on the block for some time, the last few months had seen sudden interest from new bidders.
The parties will not disclose financial details until the deal is completed in January.
EM.TV said it will use the proceeds to pay off the final loan installment on its share in the Junior TV library, a joint holding with insolvent Kirch Group.
Junior TV, which comprises the bulk of EM.TV's 26,000 half-hours of programming, soon will be owned 100% by EM.TV as part of the Kirch selloff.
Pres said EM.TV also is in the process of buying German sports channel DSF.
(Carl DiOrio contributed to this report.)
