Thanks to a court injunction granted by Ohio Court of Common Pleas Judge Dick Ambrose earlier today, American Greetings has temporarily blocked the sale of DIC Entertainment to Cookie Jar Entertainment.
American Greetings argued that its long-standing agreement with DIC that gives the company the licensing and merchandising rights to multi-billion dollar property Strawberry Shortcake prohibits DIC’s sale to a competitor without first obtaining American Greetings’ consent.
Strawberry Shortcake is big business for DIC, whose 2007 revenues sat at US$74.7 million with its L & M activities accounting for 68.4% of that number. According to DIC president and COO Jeffrey Edell, Strawberry is on track to generate US$28 million of DIC’s projected overall revenues of US$80 million in fiscal 2008 – doing the math, that means Strawberry currently accounts for roughly 35% of DIC’s revenues.
For his part, American Greetings Properties president and CEO Josef Mandelbaum says AG was informed of the sale some time after DIC and Cookie Jar agreed in principle to the deal. ‘We are the underlying owners of Strawberry Shortcake,’ he said. ‘We asked that they not sign anything until we had an agreement to move forward. They elected to do it without our consent, and all we’re doing now is invoking our rights in the contract.’ Mandelbaum added, ‘We’re disappointed that it came to this, but this is the path [DIC and Cookie Jar] chose to go down; they cannot close the deal based on the judge’s order today…our objective is to stop the deal moving forward without our consent.’
Edell countered that DIC and Cookie Jar were expecting AG to make a formal objection. ‘It has been fully accommodated for in our arrangement with Cookie Jar,’ he said. ‘It won’t cause Cookie Jar to back out of the deal.’ He continued, ‘We believe this is totally unfounded and we will be prepared to fight and get it overturned.’
When reached in his Toronto office this afternoon, Cookie Jar CEO Michael Hirsh said he could not comment on the AG action as he had yet to view the court document.
Both sides are now waiting for the Ohio Court to set a hearing date as the injunction is temporary.
Additionally, reports circulating earlier today that DIC founder Andy Heyward would be leaving the company are unfounded. The injunction notwithstanding, Heyward is in the process of negotiating a new contract with Cookie Jar to continue leading DIC as a separate subsidiary under the Cookie Jar Group banner.