World

German TV Gives Back Big Bird

December 4, 2000 / 12:00 PM EST / AP

Kermit and Big Bird are heading home.

Less than a year after buying rights to the cuddly critters, German media giant EM.TV and Merchandising AG said Monday it is selling the characters from the hit show Sesame Street to the New York-based non-profit company that has produced the world-famous children's series since 1969.

Under the deal, Sesame Workshop, known as Children's Television Workshop until a name change earlier this year, gets exclusive rights to such fuzzy figures as Kermit the Frog, Bert and Ernie, and the scraggly green furball, Oscar the Grouch - objects of affection to viewers in 140 countries.

It marks the homecoming of some of the most beloved icons in U.S. history, but also the demise of a yearlong spending spree that saw fast-growing EM.TV buying up the Jim Henson Co. as well as Formula One racing, which is now also earmarked for a partial sale - to rival German media magnate Leo Kirch.

Under the deal, EM.TV will continue marketing the Sesame Street characters in Europe and retains rights to other Muppet figures picked up in February's $680 million Henson Co. deal, including The Muppet Show, Jim Henson's Muppet Babies, Fraggle Rock, and The Adventures of Elmo in Grouchland

"That's the for-profit part of the operations," EM.TV spokesman Michael Birnbaum said. "We still see buying the Jim Henson Co. as the right move in going more international."

Birnbaum would not say how much Sesame Workshop was paying for rights to the Sesame Street television characters.

Munich-based EM.TV was hit by a $ 7.13 million loss for the first nine months of the year before taxes, interest and depreciation. And the Henson Co. acquisition contributed $ 2.9 million in red ink, the company said Monday.

On Friday, the company also said it wouldn't meet its full-year sales and earnings targets.

EM.TV deputy chairman Florian Haffa stepped down Monday, saying he no longer had the confidence of shareholders. The company's stock has nose-dived this year as investors fretted about the company overextending itself.

Shares were down 28.41 percent to $10.20 in Frankfurt trading Monday, shedding 90 percent of their value from a high early this year.

In an attempt to turn the tide, EM.TV said Monday it would also sell a 25 percent chunk of the company to its privately owned rival Kirch Group, which operates a far-flung television and film empire.

Kirch group will buy a 16.74 percent of EM.TV's shares, worth roughly $246 million by Monday's stock price, through a capital increase. Chief executive Thomas Haffa, Florian Haffa's brother, will also sell an 8 percent share of his voting rights in the company, giving Kirch 25 percent of the total voting rights.

Thomas Haffa will remain with the company as chief executive.

Kirch will also take a 49 percent stake in EM.TV's Formula One business for $554 million. In March, EM.TV bought 50 percent of the holding company tat runs Formula One racing in a deal that set the company back $1.6 billion.

"Formula One was one of our most important investments, but also one of our most expensive," Birnbaum said. "That's why we needed a strategic partner to help share the burden."

Founded in 1989 by Thomas Haffa, EM.TV produces children's and family programs, manages the distribution of such TV shows as Pigs Next Door and Norman Normal and produces various television specials such as the Snowboard World Championships 1999.

The company has a portfolio of about 28,500 half-hour episodes marketed under the brand Junior, which was formally jointly owned with Kirch. Under Monday's deal, EM.TV will take 100 percent ownership of the Junior shows.