Disney Invites Kermit, Friends to Join Mickey : Henson to Sell Muppets, Will Stay Creative Head

Kermit the Frog joins Mickey Mouse under a deal announced Monday in which Walt Disney Co. will acquire Jim Henson’s production company and rights to his popular Muppet characters.

Disney will pay an undisclosed sum--estimated by one source at $150 million to $200 million--for all of the assets of New York-based Henson Associates Inc. These include an extensive library of television shows and movies, merchandising rights and a 15-year contract for the creative services of Henson himself.

“He’s almost like a creative designated hitter,” Michael D. Eisner, Disney’s chairman and chief executive, said in an interview.

“It’s the kind of acquisition we like to make,” he added. “We’ve not made a lot of acquisitions in the past few years, but if we can make one in an area that attracts enormous creative talent, that’s what it’s all about.”

Analysts said the companies would make a perfect fit.

Merchandise Will Be Attractive

For Disney, it would mean a whole stable of recognizable characters to be capitalized upon in television, movies, theme parks and merchandising--crucial to a character-driven company whose only major new player is Roger Rabbit. It is believed to be the first time that Disney has gone outside the company for non-literary characters.

Muppet merchandise should be particularly attractive to Disney as it expands its new chain of Disney Stores in shopping centers across the country.

An added benefit: Kermit, Miss Piggy and Fozzie are perhaps as well known abroad as Mickey, Minnie and Donald and would aid acceptance of Disney’s planned Euro Disneyland near Paris and other foreign projects.

For privately held Henson Associates--which has had mixed financial success lately with increasingly unconventional projects--the deal offers Disney’s deep pockets for developing feature films and TV programs, clout from Disney’s television syndication arm and access to Disney’s pay cable television channel.

The agreement in principle, announced Monday at the Disney-MGM Studios Theme Park in Florida, also frees Henson from the worries and financial burdens of distributing, merchandising and marketing Muppet ideas, analysts said.

Company Will Produce Movies

“It’s certainly a nice acquisition for Disney in that it will expand upon their current repertoire of children’s programming and characters,” said Jeffrey Logsdon, director of institutional research for Crowell, Weedon & Co. in Los Angeles. “I’m sure there’s multiple benefits in both film production and on the theme park side from having licensing rights to these characters.”

Except for Kermit the Frog, Disney would not acquire rights to the Muppet characters that appear in the public television program “Sesame Street,” including Big Bird and Oscar the Grouch. Those characters are part-owned by the show’s producer, the Children’s Television Workshop, although Henson created them and will continue to perform in the show.

For the Disney organization, Henson and his company will produce movies, network and off-network television programs (including shows for the cable Disney Channel), home video programs and Muppet attractions for Disney theme parks.

The first project is a 3-D film attraction featuring Kermit and the Muppets, to debut in May at the Disney-MGM theme park in Florida, said Jeffrey Katzenberg, head of Disney’s film unit. A version of the attraction is expected to appear at Disneyland as well.

Disney also gets the rights to Henson’s library of films and television programming, which includes the “Muppet Show” and “Fraggle Rock” TV series, “Jim Henson’s Muppet Babies” animated children’s show, as well as the three Muppet movies and two other films.

Competes With Disney

When Disney takes over Henson’s company, it’s unclear what will become of Henson’s existing relationships. Katzenberg said Disney would honor existing contracts, but he declined to speculate on future decisions.

“Muppet Babies” is now produced by Marvel Productions, the animation unit of New World Entertainment and a direct competitor with Disney in the Saturday morning arena. Marvel’s contract with Henson runs through the 1991-92 season.

“Sesame Street” Muppet characters are also featured in a Pennsylvania theme park, Sesame Place, operated near Philadelphia by a unit of Anheuser-Busch Co. under license from Children’s Television Workshop.