Mickey and Miss Piggy won't be an item after all.
Walt Disney Co. has ended its flirtation with the struggling Jim Henson Co., creator of the Muppets. Instead, a group headed by media entrepreneur Dean Valentine has signed a letter of intent to buy 49.9% of Henson Co. from EM.TV.
The German children's programming company will retain the controlling interest in Henson while raising much-needed cash to pay impatient creditors.
"Everybody in the world knows who Kermit and Miss Piggy are," Valentine said Tuesday. "The fact that the company has obviously been the subject of corporate turmoil over the years and the characters have not had the kind of exposure that they will have now, doesn't mean it's a frayed or decaying brand. It's just a little bit asleep."
EM.TV announced the planned sale Tuesday but declined to specify the value of the deal, which is expected to close next month.
Valentine, former chief executive of Viacom Inc.'s United Paramount Network, also would not discuss the details of his offer, noting that the deal had yet to close. Valentine's partner is Europlay Capital Advisors, an Encino-based private equity firm.
Their bid was among several that emerged in recent months, including one from billionaire Haim Saban. Those offers -- some of them for the entire company -- were in the $100-million to $140-million range, said a source familiar with the matter.
Disney also was weighing whether to enter the competition.
The Burbank company has long had an interest in acquiring the characters to expand its portfolio of family entertainment. More than a decade ago, Disney had agreed to buy Henson Co. for $150 million. But the deal unraveled after the Muppets creator died in May 1990.
This time, however, the two sides couldn't agree on a price. Disney Chief Executive Michael Eisner was reluctant to invest the kind of money needed to turn around Henson Co., a Disney source said. These days, Disney is looking to slim down as a way to shore up its bottom line, squeezed by the falloff in tourism and travel and earlier problems at its ABC television unit.
It is widely acknowledged that EM.TV was unable to restore the magic to the Muppets franchise, which was hugely popular on television in the late 1970s and early '80s.
In the ensuing years, the characters were not successfully updated or marketed for a new generation of viewers hooked on characters such as Arthur, SpongeBob SquarePants and the Rugrats.
To help revive the Muppets, Valentine has tapped a new management team that includes Mort Marcus, the former chairman of Miramax Television & Video, and Nick Van Dyk, a former executive vice president of Artisan Entertainment.
Valentine once headed Disney's Touchstone TV and animation unit, where he oversaw the creation of the shows "Home Improvement" and "Ellen." He also established Disney's lucrative direct-to-video animation business.
Drawing on his background at Disney and UPN, Valentine hopes to give the Muppets exposure across multiple outlets, including stage shows, movies, cable and broadcast television and direct-to-video releases. The strategy would include, for example, television movies such as the recent Muppets Christmas special on NBC, which drew surprisingly strong ratings.
Munich-based EM.TV, which had been searching for a buyer for more than a year, was under pressure from its lenders to quickly close a deal. EM.TV paid $680 million for Henson Co. in March 2000, one in a series of media acquisitions that left the company with hefty debts of more than $900 million.
The sale doesn't include some of the Muppets' most recognizable names from the children's show "Sesame Street," such as Big Bird and Bert and Ernie. The rights to the characters belong to Sesame Workshop.