Sony Pictures Entertainment is closing in on a deal with Jim Henson Productions to develop, produce and distribute motion pictures specifically aimed at the family market, according to knowledgeable sources.
The agreement--which would cover feature films only--is being finalized and is not expected to be consummated for at least several weeks. Sources familiar with the negotiations say the arrangement calls for between 12 and 15 movies to be made over the next five years, at least a few of them Muppet movies.
The Henson company is already in business with Disney, where some top executives were stunned to hear of a deal being made across town with its rival.
"Nobody's ever sold a franchise out from under Disney," said one insider at the studio, who said Chairman Michael Eisner learned of the deal after the fact.
Word is that Sony and Henson Productions, founded by late Muppet creator Jim Henson and run by his 31-year-old director son, Brian, and the company's 33-year-old chief operating officer, Charles Rivkin, would function as a partnership. Since Henson Productions is Hollywood-based, it's assumed that the company would relocate its headquarters to Sony's Culver City lot. The company, which employs more than 200 people, also has offices in New York (home of the Muppet Workshop) and in London (where the Creature Shop lives).
Sources estimate that Sony's overall production investment in the venture would be $50 million to $75 million. Henson would reportedly be a profit participant on the movies made under the deal.
Some say the alliance would be much more than a standard Hollywood production deal in that the Henson movie entity might not be directly aligned with either of Sony's two movie labels, Columbia Pictures or TriStar Pictures, but rather could stand alone.
Brian's older sister, 35-year-old Lisa Henson, who is president of Columbia and who sits on the board of Henson Productions, was reportedly instrumental in bringing the parties together.
Sources said the deal was not shopped around to any other studios--which drew criticism from competitors.
"She sits on the board of the (Henson) company and is co-heir to the franchise!" said one rival studio executive, adding, "I'd say that's a conflict of interest."
Just two weeks ago, Sony announced an exclusive deal with the nonprofit Children's Television Workshop--which controls Henson's "Sesame Street" characters--to develop, produce and distribute feature films (under Columbia), home videos, audiotapes and books on tape.
Both the Workshop agreement and the proposed movie deal with Henson Productions are intended to bolster Sony's children's and family programming.
It is unclear when the first movie under the Sony deal would be made; Brian Henson is now shooting "Muppet Treasure Island" in London for Disney, which has an option on one more Muppet movie.
The Henson company and Disney have a long, spotty history. While the relationship has been on a positive and productive course for the past several years, that wasn't always the case.
In August, 1989, Jim Henson had a handshake agreement with Eisner to sell all of the assets of his business to Disney, except for the "Sesame Street" characters, for $150 million.
But the deal busted apart when the 53-year-old puppeteer died of virulent pneumonia in May, 1990. Disney believed the value of the company was diminished without Henson. Five months later, Henson's five children sued Disney, alleging copyright and trademark infringements for exploiting the Muppet characters it didn't yet own. Disney countersued.
The suits were settled a year later, with Disney paying $10 million for limited theme park rights to the Muppet characters. Disney also has worldwide video rights to the Hensons' existing 300 hours of TV and film programming for five years, as well as certain cable TV and international distribution rights to pre-existing TV programming through 1997.
Henson's death could have meant the demise of the company if not for eldest son Brian, then 27, who despite his lack of experience in running a business was chosen by his siblings to take the reins. Over the past five years, he has helped put the multifaceted family entertainment firm back on its feet.
Capitol hits: The good news for Capitol Records is that nostalgic Christmas shoppers snatched up millions of repackaged catalogue compilations by Bob Seger and the Beatles over the holiday season, helping the firm to achieve what company sources are calling record profits in 1994.
The bad news is that the buzz in the record business isn't about what juicy acts Capitol's new management regime has discovered, but about who has been shooting at the firm's landmark high-rise on Sunset Boulevard in recent months.
Police are investigating three early-morning shootings since January in which unknown assailants opened fire on the historic building, blasting out the glass front doors twice and piercing the office windows of several top executives.
Nobody has been injured, but sources at the company say someone left threatening messages on the phone machine of one senior executive.
Insiders speculate that the shootings could be the actions of a disgruntled former employee or artist manager who lost out in a corporate restructuring undertaken by Charles Koppelman, chairman of the North American division of EMI Records Music Group, which owns Capitol.
Security has been beefed up at the building, and Capitol Records CEO Gary Gersh, who declined to comment, has reportedly hired a bodyguard.