Saban Entertainment and Fox Broadcasting Co. have struck a strategic alliance that will look to create children’s programming networks worldwide by capitalizing on Saban’s library and Fox-parent News Corp.’s distribution strength.

The deal culminates two years of on-again off-again negotiations between the two companies. At one point, Fox was hoping to acquire the company or at least take a stake in it, but Saban Entertainment chairman Haim Saban isn’t selling.

“There is a clear need to build the top-rated Fox Children’s Network internationally,” says Margaret Loesch, president of Fox’s moppet web, in explaining the motivation behind the venture. “On an international arena, we will work to build businesses. We have access to Saban’s libraries, marketing and distribution, and Saban has access to our platforms.” Those platforms include Star TV and British Sky Broadcasting.

Under the terms of the deal, Saban- producer of the hugely successful “Mighty Morphin Power Rangers” and “X-Men” – will remain an independent production company, but programming produced for the venture will appear under the Fox banner. International channels will also carry the shows under the Fox name.

“Saban is free to sell to other people, but if we put any money into the product, then it would be for us,” Loesch explained.

Although no cash or stock is changing hands, sources familiar with the deal did not rule out Fox eventually taking a stake in the company down the road.

Fox and Saban are among several companies looking to create a brand name for children’s programming worldwide. Warner Bros, also plans on launching several family channels that will rely heavily on its own animated fare. Turner Broadcasting’s Cartoon Network and the Disney Channel have similar plans. Loesch says that through Saban’s library of more than 3,300 shows the venture will be able to “customize entertainment service in whatever regions we serve.”

Merchandizing key

The other key component to the venture will be licensing and merchandising. “Our people (in those areas) have done a great job, considering this is not their business,” Loesch says. Under the agreement, Saban will get merchandising and licensing fees, with Fox getting revenue.

Fox affiliates, Loesch says, should also benefit by the venture. Affils, Loesch says, will share the wealth on the international front. Fox affiliates are due to receive payments for FCN when the venture turns profitable later this year.

Loesch will continue to oversee the successful FCN. Fox is understood to want to renegotiate her current contract and lock her up in a long-term deal.

Whether Saban will ultimately look to sell a stake in his company remains to be seen.

The privately held corporation has at times had partners. In 1988, Compagnie Luxembourgeoise de Telediffusion, one of Europe’s largest broadcast groups, had a 25% stake in Saban and later acquired a 50% stake in the company’s animation studio in Paris. Earlier this year, Saban bought out CLT.

Rising revenues

Saban’s revenues for the last year are said to be more than $500 million. The company saw its fortunes rise with the massive success of “Mighty Morphin Power Rangers.”

Saban’s joint venture with the United Paramount Network will not be impacted by the Fox deal.

However, UPN is said to be in talks with several children’s program suppliers, including Disney, DreamWorks and Marvel.

Saban is not without its baggage. The company is currently embroiled in a lawsuit with its former licensing vice president Debora Young. In her $2 million suit against the company, Young alleges that she was terminated without cause and that the company refused to pay her bonuses.