Kids media co. strikes deal with programmer

Cookie Jar Group, a privately held Canadian children’s entertainment and education company, has cut a $31 million deal to merge with kidvid titan DIC, the programmer and merchandiser of such successful children’s properties as Strawberry Shortcake.

But the deal may face a snag. American Greetings, which owns the Strawberry Shortcake character and struck a deal with DIC to handle licensing and merchandising in 2001, obtained a temporary restraining order on Friday to block the merger from going forward. Greeting card company said it has the right to approve any transfer of the Strawberry Shortcake licensing pact and that it “did not consent to the proposed sale of DIC to Cookie Jar” and was only told about the deal after DIC had agreed to the deal.

American Greetings said the injunction was granted in Cleveland by Judge Dick Ambrose in the Cuyahoga County Court of Common Pleas. Andy Heyward, DIC chairman and CEO, said American Greetings’ legal maneuver was without merit and that he was confident it would not hold up the merger process.

Nonetheless, Strawberry Shortcake merchandise accounts for a significant portion of DIC’s revenue, and any friction in its relations with American Greetings could hit the company’s bottom line over the long term. A hearing on the restraining order is expected to be skedded in Cleveland in the next few weeks.

Terms of the deal call for Cookie Jar to pay approximately $31 million for all of the issued and outstanding equity in DIC. If the deal is completed, DIC will continue as a subsidiary of the privately held Cookie Jar.

Heyward said the impetus for the deal was to allow both Cookie Jar and DIC to expand the scope of their businesses.

“You can’t just produce kids programming anymore — you have to think of retail, home entertainment, the entire food chain. You must be big to do that,” Heyward said. “It’s not possible for a small entertainment boutique to thrive on its own anymore.”

“Our combined company will be a powerhouse in children’s brands, with global reach through television, DVD, online, books, music and consumer products,” added Toper Taylor, president and chief operating officer of Cookie Jar.

The merger, Heyward noted, will allow Cookie Jar to tap the strong licensing and brand merchandising acumen of DIC, while the latter will enjoy the formidable production infrastructure established by the former in Canada.

Heyward expects DIC’s current incarnation to stay intact — the company just reupped its lease on its Burbank facility, and he just signed a five-year deal to continue on as topper.

DIC has amassed over the past 25 years an animation library of about 3,000 half-hour programs and a number of popular merchandising lines in the toy and kid products licensing biz. DIC’s successful properties include Madeline, Mommy & Me, The Beginner’s Bible and Eloise.

For its part, Cookie Jar’s programming and brand-management stable includes such properties as Doodlebops, Caillou, Hurray For Huckle!, Johnny Test and Magi-Nation.

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