DIC, Cookie Jar Merger Hits AG Block

CLEVELAND, June 23: American
Greetings Corporation has obtained a temporary restraining order blocking the
proposed sale of DIC Entertainment to Cookie Jar Entertainment over concerns
for its Strawberry Shortcake
brand.

Cookie Jar announced on
Friday that it would spend $31.5 million for all the issued and outstanding
equity in DIC, in a transaction valued at $87.6 million. DIC is to become a
subsidiary of Cookie Jar, creating a combined kids’ and family programming library
of almost 6,000 half hours—including content based on the Strawberry
Shortcake classic doll brand. On
behalf of American Greetings, DIC has been serving as the licensing and
merchandising agent and distributor of certain entertainment for Strawberry
Shortcake. AG notes that its
contract with DIC includes a clause mandating AG’s consent for a sale to a
competitor.

"We are deeply disappointed that it had to come to this as it
was not our desire to seek legal action,” said Josef
Mandelbaum, the president and CEO of the Intellectual Properties Group at
American Greetings, in a statement provided to World Screen Newsflash. “We were very open to having a
conversation with Cookie Jar and DIC; however, they declined to engage in
meaningful discussions with us. With that said, we need to make sure we are
doing all we can to protect one of our greatest intellectual properties in Strawberry
Shortcake."

The Strawberry Shortcake brand will reportedly bring in about $28 million for DIC
in fiscal 2008, some 35 percent of its total revenues for the year.

Cookie Jar has not yet issued a comment on the injunction. Andy
Heyward, the chairman
and CEO of DIC—who is said to be negotiating a five-year contract to
continue running the company after the sale—told the Los Angeles Times: "We expected this, and frankly
we don't consider that it has any merit. We are prepared to move forward with
the merger, and we are moving forward.”

—By Mansha Daswani