Entertainment Weekly on Henson Deal

[MediaSavant]

Entertainment Weekly

May 23, 2003

SECTION: NEWS + NOTES; Pg. 11

LENGTH: 429 words

HEADLINE: Puppet Masters;
The Muppets are once again a family business, but will they get piggy with it?

BYLINE: Allison Hope Weiner

BODY:
Less than a week before Kermit and Miss Piggy were about to be sold by Germany's troubled, cash-strapped EM.TV & Merchandising to the New York-based Classic Media, Jim Henson's heirs made a successful last-minute $ 89 million bid for their father's old company--a fraction of the $ 680 million the family pocketed when they sold it to EM.TV back in 2000. (Granted, half of that was in stock, which is now worthless--and the buyback did not include most of the cherished Sesame Street Muppets.)

"It was a bold and nice move for his children to get it back," says the late Jim Henson's former manager Bernie Brillstein. "God knows they didn't have to do it." Other reactions were more cynical, with one television exec noting "With the return of the company to the family, it's like we're seeing Groundhog Day without the happy ending."

Indeed, long before the Germans came calling, the Henson company was having problems under the control of none other than the Henson children. "The company was extremely mismanaged. They didn't have the revenue to support their ridiculous overhead and they refused to fire anyone," charges one TV executive familiar with the company. "They lived off a financing-overhead deal with ABC for years and never developed anything commercial other than Bear in the Big Blue House."

Since selling to EM.TV, the Hensons have been concerned about how the German company was managing their father's legacy. "They started cutting off pieces of the company and selling them for cash," says Brian Henson. EM.TV also started carelessly licensing the puppets, even allowing Miss Piggy to appear in ads for Denny's, home of the Bacon Cheddar Burger. In 2001, EM.TV sold all the Sesame Street Muppet characters (except for guest stars Kermit the Frog and Miss Piggy) to the Sesame Workshop, which produces Sesame Street.

"We stepped in because we couldn't see where the company was going and that made us uncomfortable," Brian Henson said. All five kids will now sit on the board; Brian and Lisa, a former Warner Bros. and Columbia executive, will serve in some management capacity. Their primary job: oversee licensing deals for Kermit and Miss Piggy and develop a hit to ensure that the Jim Henson Co. has some kind of future. Brillstein doesn't count them out. "They couldn't do any worse than the Germans," he says. "Although it's tough. It's like going back with your ex-wife. There's damage. Maybe you can straighten it out. It's hard to know."

As Kermit might say, it's not easy making green.

GRAPHIC: COLOR PHOTO: KERMIT: TM & (c) 2003 THE JIM HENSON COMPANY; COLOR PHOTO: HENSON FAMILY: BERLINER STUDIO/BEIMAGES, The Henson heirs: Cheryl, Brian, Lisa, John, Heather

[LiLOrion]

You beat me to the post Mediasavant. I wasnt sure where exactly it belonged on the board so I didnt bother typing it all up. :)

I guess making as much money as possible by spending as little as possible, usually at the expense of "quality" (quality TV I know means different things to different people and is purely subjective) is the goal of Hollywood - I know I just stated the obvious. :D
They could have at least interviewed people with reactions to the buy back who know what real ART is. The Henson's obviously dont focus on the "bottomline", true artists usually dont as there is more to ART then how much money it is going to bring in. Although granted when you run a company the bottomline is important, but regardless, I'm glad the company is back in the family's hands. Hopefully they will turn the company around.

[gurnemanz]

How do you see it?

g.

[Digger]

Their primary job: oversee licensing deals for Kermit and Miss Piggy and develop a hit to ensure that the Jim Henson Co. has some kind of future.

I'd say they already have a hit. It's just in limbo right now.

[Dominar of Action]

"The company was extremely mismanaged. They didn't have the revenue to support their ridiculous overhead and they refused to fire anyone," charges one TV executive familiar with the company. "They lived off a financing-overhead deal with ABC for years and never developed anything commercial other than Bear in the Big Blue House."Hmmm, setting aside the sour-grapes flavor of this quote, I have to wonder if (a) this guy/gal is talking about the EM.TV years and the reporter got it bass-ackwards, or (b) the "exec" doesn't know what s/he's talking about. BITBBH was created in 2000 and is a very successful show and has huge merchandising behind it. I would think that any network would kill to have something like it. To dismiss it the way this quote does is like saying George Lucas is a failure because he hasn't done anything other than Star Wars. :rolleyes:

As for the comments re: mismanagement: sure, if you measure success only in terms of the bottom line, it was perhaps "mismanaged." But as we know, the Henson family is not all about the money. Yes, I'm sure they want to make a decent living for themselves and their employees, but they realize that at some point, there is such a thing as having enough money. They also appear to value their employees and realize they are not simply fungible assets to be readily disposed of when things get tight. That kind of loyalty is rare and is certainly returned. I'm sure it's a foreign concept to most people in Hollywood.

And that "damage" Brillstein mentions? Although the article is written in a way that suggests the damage was caused by the Henson kids, it seems more likely that the "damage" he's referring to is in fact the damage to employee morale caused by the Germans during their tenure. I can't help but flash on Tiriel's description of the Henson employees she encountered when delivering the basket, "Charlie"'s e-mail to employees after the sale was announced, and other communications people have had with Henson both before and after the sale that strongly suggest that everyone there is *very* happy with the turn of events.

Let's just say I'll personally take this reporter's POV with a huge pile of salt.

[DentArthurDent]

This won't all be wine and roses, not by a longshot. There is reason to hope, however... This sort of thing is always the dance on the razors edge, always hard. We talk about people with passion, about art ruling busuiness. That is opposite but also doomed to failure. The middle of the razor is the only place that can be worked at, the partnership between art and business. Strategy wise this is an excellent time to be them. People who grew up with the muppets, now have children of their own to turn on to the muppets, so they have marketing possibilities, there. I'm sure that FarScape will help them with shopping Henson' services around. It just won't be easy. On the other hand It still is the situation, that after a bit of a wakeup call, the Hensons are back in charge, I hope that they can come in for the win. It is important to look at it another way. Is the success of artistry necessarily the monetary bottom line? This is where business itself can't fathom things. Leaving a legacy of imagery well known to many children, enrichening peoples lives, providing fulfilling jobs to a workforce. These things have a value that is hard to calculate. Many companies like this are not wall street darlings. Many are sold by the family to regular corporations, only to go back later. Many are never wildly profitable. Some never grow big, but what yardstick is success measured by? I know another company, older, larger, different, but still very strong. They have been through many changes good and bad over the years, but still provide a quality product, enrichen their employees, make people think. A product now genreational, a product still changing. Their name means Play-Well, you would know them as LEGO.

In the end I think we should ask ourselves if the only reason for television production is to sell products. Is that it? One big spam? I think that a lot of the business types look at it that way. I think they are wrong, myself. If you want to show me some product while I am being entertained. That's OK. If you want to help defray the cost of the production, by selling the time to give me the ad, I can deal with that too. But I will have to draw the line if you tell me what entertainment I will watch based on what the advertiser thinks I should see. I can always take myself elsewhere... Don't get the cart in front of the horse...

OK, end of rant

AFD

Oh, and while I was hunting down letters to put on the page DominarofAction, has made some very fine points too...that's what I get for being so slow...

[LiLOrion]

Originally posted by DentArthurDent
In the end I think we should ask ourselves if the only reason for television production is to sell products. Is that it? One big spam? I think that a lot of the business types look at it that way. I think they are wrong, myself. If you want to show me some product while I am being entertained. That's OK. If you want to help defray the cost of the production, by selling the time to give me the ad, I can deal with that too. But I will have to draw the line if you tell me what entertainment I will watch based on what the advertiser thinks I should see. I can always take myself elsewhere... Don't get the cart in front of the horse...


OT -
Funny you should say that cause one large radio company (might have been ClearChannel, not sure), views radio as just that, A MEDIUM TO SELL PRODUCTS. They have had a few TV specials on the past few days cause of the whole FCC thing about allowing companies to snatch up more radio space. The time of the small town radio station that caters to their community (including events and small town breaking news) might be coming to an end in favor of prerecorded, mass-broadcasted radio.

[atomicblue]

"They lived off a financing-overhead deal with ABC for years and never developed anything commercial other than Bear in the Big Blue House."
__________________________________________________ _
Whine,whine.........obviously this individual has never heard of the Dark Crystal, and well......duh, Farscape! I think people like to bitch and moan because they can. They probably feel that way cause they feel as if they were burnt in one way or another. Who better than the family to see the Henson dream?
Also perhaps alot of the Henson family has grown up, and this is their second chance. If it doesn't work out, then the naysayers will be there saying "I told you so". Yeah, right.......and chicken little thought the sky was falling.

[MediaSavant]

Originally posted by gurnemanz
How do you see it?

g.

I have no knowledge of the inner workings or business balance sheet of Henson.

However, David Kemper has stated in his essays in the Farscape Magazine that Farscape won't make a profit for a long, long time.

If one considers him him a reputable source--and I generally do--I'd say that Farscape currently cannot be considered a profitable or "commercial" property in the Henson portfolio. Thus, the article appears to be accurate by not citing it as such.

Only time will tell what further investment into it the Hensons put in or whether they just wait it out until it slowly makes back money.

The only significant revenue at this time appears to be license fees from SciFi and other international broadcasters and the DVD's. Is there anything else? The books appear to be in limbo and even Creation appears to be cutting back on conventions.

[uisceboo]

"The company was extremely mismanaged. They didn't have the revenue to support their ridiculous overhead and they refused to fire anyone," charges one TV executive familiar with the company. "They lived off a financing-overhead deal with ABC for years and never developed anything commercial other than Bear in the Big Blue House."

Sounds like every family business I ever knew. Hard times happen; you don't fire people you love and trust just because the money is tough. EM.TV sounds like a bunch of hard-asses, and I am glad to be rid of them.

--boo, who works for a media company run by a family...who value friendhsip and trust as well as the bottom line. This is the American dream.... loving it!

[nallard]

Originally posted by MediaSavant
I have no knowledge of the inner workings or business balance sheet of Henson.

The only significant revenue at this time appears to be license fees from SciFi and other international broadcasters and the DVD's. Is there anything else? The books appear to be in limbo and even Creation appears to be cutting back on conventions.

DVD revenue shouldn't be sneezed at however. It helped keep 24 (a hugely expensive show) on the air and ABC hopes it will boost mediocre profit from Alias (another expensive show).

[LadyCrais]

Okay, working with no facts at hand and only faulty memory, but....

every article I can remember reading about EM.TV mentions that Henson is/was the only division actually managed correctly and actually making money. It's the only or one of the only PROFITABLE branches of EM.TV. The fact that EM.TV got to keep the cash as part of the purchase price from Brian more or less attests to that. I've read not one word that the Henson children just bought a debt-ridden, failing company back. So I'd say whoever the bozo making these mismanagement statements is either grossly uninformed or has an ax to grind for some inexplicable reason.

[grapeshot]

First of all, we all know that just because something appears in print doesn't make it true, and few reporters bother to research the WHOLE story. (Remember some of the mis-reporting and lazy reporting that we've seen regarding SciFi and Farscape?) I tend to agree with DoA, but maybe we'd better check out the facts. I did just a wee bit of research on the Henson ouevre, and here are some titles and dates. I'll start with 1990 thinking that covers the past 13 or so years and maybe we can see what's what. (1990 was also the year that Jim Henson died.) I'll list productions for both Jim Henson Productions, and Jim Henson Television, as well as Henson Associates. This should make a pretty good list of Henson's tv series, specials, and all movies (theatrical and otherwise).

1990 The Muppets at Walt Disney World a 60 minute television special
1990 The Witches a theatrical release feature film

1991 Muppet*Vision 3-D a short at Walt Disney - MGM Theme Park
1991 Dinosaurs a TV series from 1991 to 1994

1992 Dog City a TV series...looks like for the UK and Canada, but didn't last long.
1992 A Muppet Christmas Carol a theatrical release feature film

1993 ---

1994 ---

1995 Mr. Willowby's Christmas Tree a half-hour television special

1996 Gulliver's Travels a television mini-series presented by Hallmark
1996 Aliens In The Family a television series that aired briefly on ABC. User reviews at IMDB swing wildly between "LOVED IT" and "HATED IT"
1996 Muppets Tonight! a television series that aired for two years...probably on ABC
1996 Muppet Treasure Island a theatrical release feature film
1996 The Wubbulous World Of Dr. Seuss, Vol. 1 looks like a television show, but cannot find many details. Is available on VHS at Amazon and users highly recommend it for toddlers.

1997 Bear In The Big Blue House a television series on the Disney Channel which still seems to be in production
1997 Buddy a theatrical release feature film. universally panned.

1998 Brats of the Lost Nebula TV series aired on WB (?)and canceled after one episode

1999 Farscape TV series aired on SciFi in the USA, cancelled in 2003
1999 Donna's Day TV series produced in conjunction with Odyssey Network, but can find no other info.
1999 Adventures of Elmo in Grouchland a theatrical release feature film -- doesn't seem to have done good box office
1999 Muppets From Space a theatrical release feature film
1999 Family Rules television series on UPN, appears to have been very short-lived




2000 EM TV Buys Henson

2000 Rat a theatrical release feature film -- almost universally panned and appears to have had very little distribution
2000 The Fearing Mind television series, aired on Fox Family, and seems to have been canceled after about 6 episodes

2001 Jack and the Beanstalk television miniseries - presented as a Hallmark special
2001 Telling Stories with Tomi DaPaola something for television, but can find NO other information

2002 A Very Muppet Christmas Movie a television special
2002 Kermit's Swamp Years: The Real Story Behind Kermit the Frog's Early Years Movie - direct to video
2002 Farscape The Game video game


2003 Animal Jam television series, The Learning Channel, don't know if it's still running
2003 Bambaloo animation television series, Australian
2003 Good Boy! looks like a theatrical release feature animation film. Status is "in post production" and looks to be released in October


This didn't take all that long for me to research. It does tend to support the quoted executive in that none of these have been terribly huge box-office hits, but I think on balance, the successes outweigh the failures. Furthermore, Henson is clearly one of the few production houses that strongly believes in making solid and quality family entertainment. (Even Disney hedges their bets by creating "adult" entertainment divisions.) In doing this research I glanced at a lot of viewer comments, and for the most part they are quite favorable.

I'm sure that Henson may have further increased their profits by cutting "overhead" (i.e. employees), but it's clear from the viewer comments that Henson's productions (even the short-lived ones) and characters (even these newer ones) are beloved by many. It's not so clear whether by cutting their overhead if they could have maintained the overall quality of any of their shows and movies. Henson has remarkable goodwill throughout the world. (Dare I say much more even than Disney?) I don't know that they would have the name recognition if their quality of their productions had not been kept as high.

One last point, it seems as though Henson's output had decreased during the years they were owned by EM TV. Keep in mind, however, that for most of that time they were still producing TWO television series (The Bear In The Big Blue House, and Farscape). However, it's very clear that EM TV did not help Henson bankroll additional productions.

[waltersgirl]

we have EM.TV's quarterlies from, i think, 3q, and Farscape was one of the only things that was profitable for the company. the reports are availabe at EM.TV's website.

[Shipscat]

Jack and the Beanstalk won a Saturn last year.

Just an FYI.

[MediaSavant]

Originally posted by nallard
DVD revenue shouldn't be sneezed at however. It helped keep 24 (a hugely expensive show) on the air and ABC hopes it will boost mediocre profit from Alias (another expensive show).

I wouldn't sneeze at it. It is a very important channel of revenue.

I'd be very interested in knowing what the sales of the DVD's actually are as true evidence of Farscape's vitality.

IMO, buying the DVD's is our most direct way to send a message about our passion for the show.

[MediaSavant]

Originally posted by waltersgirl
we have EM.TV's quarterlies from, i think, 3q, and Farscape was one of the only things that was profitable for the company. the reports are availabe at EM.TV's website.

Thanks for pointing them out to me. I looked at a pdf of the 3Q 2002 report. Is that where you saw that statement?

I don't think pdf's respond to "search" mode for the word Farscape. I eyeball scanned the report and on the page devoted to Henson there was nothing said about Farscape.

Can you help me out and tell me what page was the "profitable" statement about Farscape on?

[nallard]

This is merely anecdotal evidence (and on a smallish scale at that) but the 3.2 DVD has been hovering in the upper middle of Amazon.com's 100 bestsellers for the past few weeks and at the video store I run, Farscape is a relatively frequent renter compared to other TV on DVD that we own. I'll hunt around on the internet to see if I can find some specific sales figures for ADV. Is it a public company (if not those figures might not be available)?

[waltersgirl]

Jul,

do you have that link from EM.TV handy?

[Jul]

sure, just a moment, lemme go snag it... sorry bout the delay... fell asleep on the sofa ;)

http://www.em-ag.de/html/index.php3?cid=100122&emlv=1&sid=dasat3ecb57316974d0x43204600x1053513521

and this is the conference call which was taped, if you're interested:
http://presentation.equitystory.com/cgi-bin/slideShow.ssp?fn=presentationOnline&netPid=110&presentation_language=English

[CosmicTheorist]

MS, Adobe Acrobat does have a search function. I use version 4.0. When the file opens, look on the Adobe Reader's toolbar, there is a an icon that looks like binoculars. That is the icon for Adobe's "Look" function. Press the icon and it opens a small search box. I used it and found that Farscape is mentioned once in the 3rd quarter report on page 5. It is not mentioned at all in the 2nd quarter report; and it is mentioned once on page 10 of the 1st quarter report.

;)

[waltersgirl]

nallard,

welcome to the board btw. haven't seen ya before.;)

[MediaSavant]

Originally posted by CosmicTheorist
I used it and found that Farscape is mentioned once in the 3rd quarter report on page 5. It is not mentioned at all in the 2nd quarter report; and it is mentioned once on page 10 of the 1st quarter report.

;)

Thanks. I found the statement in the 3rd quarter report that waltersgirl pointed us to. All it says is "ABC TV in Australia acquired 64 episodes of TV show Farscape."

Where's this statement that reportedly says Farscape was profitable?

Is the profitability statement in the 1st quarter report. Waltersgirl, you are the one who saw the statement of profitability. Can you help me out in finding it?

[CosmicTheorist]

I was just telling you what I knew about searching pdf files. I was once a patent examiner and had to search a lot of online pdf documents. I got a lot of practice using the little binocular icons.

;)

[LadyCrais]

MS, I'm obviously not WG, but I thought it was Henson's profitability that was at issue. I know that what I saw somewhere was a report with numbers (much like the quarterly reports in the link) that listed Henson individually. I didn't see it when I was looking at the reports this time, but then I was skimming and I don't think the search was working within the tables. But I do recall seeing it. I'm thinking WG typed Farscape when she meant Henson, because I don't think there's a chance that you'll see it broken down to individual shows in a financial statement.

Besides which I also recall DK having made it abundantly clear that like all shows, the profit would not show up until syndication. But as we've discussed a number of times, profit for whom. I don't think SciFi lost a nickle on it. Henson on the other hand has likely not recouped their investment, at least directly (and I recall DK's figure being over 90% still in the red). However, as the showcase of talent to drum up future business as Brian intended it to be, it could have brought in 3 times the investment in new projects for all we know. So reading profit-loss statements isn't going to give us the whole story.

re: Henson's profit, I did see a statement in the 3Q report about it and one other company being the two that were most profitable. I just didn't notice it in the tables.

[waltersgirl]

i did mean Henson and didn't realize i typed Farscape. it's that human thing. apparently not everyone suffers from it.

thanks for catching that LC.

[AnnieBW]

Ah yes, but awards don't matter. Especially the Saturns. Only ratings and profitability matter.

- Annie