Allison Hope Weiner
May 23, 2003 AT 04:00 AM EDT

Less than a week before Kermit and Miss Piggy were about to be sold by Germany’s troubled, cash-strapped EM.TV & Merchandising to the New York-based Classic Media, Jim Henson’s heirs made a successful last-minute $89 million bid for their father’s old company — a fraction of the $680 million the family pocketed when they sold it to EM.TV back in 2000. (Granted, half of that was in stock, which is now worthless — and the buyback did not include most of the cherished ”Sesame Street” Muppets.)

”It was a bold and nice move for his children to get it back,” says the late Jim Henson’s former manager Bernie Brillstein. ”God knows they didn’t have to do it.” Other reactions were more cynical, with one television exec noting ”With the return of the company to the family, it’s like we’re seeing ‘Groundhog Day’ without the happy ending.”

Indeed, long before the Germans came calling, the Henson company was having problems under the control of none other than the Henson children. ”The company was extremely mismanaged. They didn’t have the revenue to support their ridiculous overhead and they refused to fire anyone,” charges one TV executive familiar with the company. ”They lived off a financing-overhead deal with ABC for years and never developed anything commercial other than ‘Bear in the Big Blue House.”’

Since selling to EM.TV, the Hensons have been concerned about how the German company was managing their father’s legacy. ”They started cutting off pieces of the company and selling them for cash,” says Brian Henson. EM.TV also started carelessly licensing the puppets, even allowing Miss Piggy to appear in ads for Denny’s, home of the Bacon Cheddar Burger. In 2001, EM.TV sold all the ”Sesame Street” Muppet characters (except for guest stars Kermit the Frog and Miss Piggy) to the Sesame Workshop, which produces ”Sesame Street.”

”We stepped in because we couldn’t see where the company was going and that made us uncomfortable,” Brian Henson said. All five kids will now sit on the board; Brian and Lisa, a former Warner Bros. and Columbia executive, will serve in some management capacity. Their primary job: oversee licensing deals for Kermit and Miss Piggy and develop a hit to ensure that the Jim Henson Co. has some kind of future. Brillstein doesn’t count them out. ”They couldn’t do any worse than the Germans,” he says. ”Although it’s tough. It’s like going back with your ex-wife. There’s damage. Maybe you can straighten it out. It’s hard to know.”

As Kermit might say, it’s not easy making green.

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