LOS ANGELES, DEC. 13 -- Walt Disney Co. and Jim Henson Productions broke off talks today after failing to reach an agreement on Disney's plans to acquire rights to Kermit the Frog, Miss Piggy and the other Muppet characters.
The proposed deal to acquire Henson Associates Inc. was valued at $100 million to $150 million. Disney also had sought an exclusive production agreement with Jim Henson Productions in the talks, which began in August 1989.
"We truly regret we could not come to terms," Disney Chairman and Chief Executive Michael D. Eisner said in a prepared statement.
Erwin Okun, a senior Disney vice president, said it was too early to tell whether the failed acquisition would preclude Disney and Henson Productions from launching future joint productions. However, he noted that statements issued by both companies were cordial.
"We have great admiration for Jim and respect for the Henson people, the family, who we've gotten to know pretty well," Okun said.
The Henson family, which has owned Henson Productions since the puppeteer's death in May, said current projects with Disney would not be affected.
Those projects include a Disney Channel television series "Jim Henson's Mother Goose," a situation comedy involving dinosaurs scheduled to air in January on ABC and a three-dimensional film that will be shown at Walt Disney World in Florida.
"We would have liked to see this deal succeed," the Henson family said in a news release. "Unfortunately, after 18 months of negotiating, the companies could not reach a mutually satisfactory agreement."
Henson founded his production company in 1958 as Muppets Inc. to produce all his properties.
Recent negotiations had centered around the lower price Disney offered after Henson death.
Analysts had speculated that his passing would lessen the value of the acquisition. Henson's personal talents formed part of Eisner's original strategy to cross-market Muppet characters such as Kermit the Frog and Miss Piggy with Disney creations.
Crowell Weedon & Co. analyst Jeffrey Logsdon said it was more likely that Disney was scared off by estate taxes owed on Henson properties.
"There were enormous estate tax problems. From what I have heard, that was a major area that was problematic," Logsdon said. "It gets down to them asking, 'What are we really getting as a return, what kind of money will we be making?' "
In calling off the talks, Disney lost the opportunity to combine two sets of highly loved and marketable characters, Logsdon said.