Jim Henson: Puppet pioneer

Analysts believe the Hollywood-based business, which EM.TV bought for $680m, is currently worth $200-250m.

The firm's value has been hit by the sale of rights in the Muppets in December for $180m, and the collapse in valuations of firms related to the internet, through which EM.TV had hoped to exploit Jim Henson assets.

Spiralling debts

But Jim Henson managers face worldwide competition for control of the business, which EM.TV revealed in March it might sell to pay off spiralling debts.

"We have had interest from the US as well as Australia and other countries," EM.TV spokeswoman Marion Moormann told BBC News Online.

Media giants Disney and Viacom are thought to be among those interested in the business.

EM.TV on Tuesday hired US investment bank Allen & Co to advise on options for The Jim Henson Company, ranging from outright sale to a partnership deal.

'Major milestone'

EM.TV bosses saw last year's Jim Henson purchase as a "major milestone" in a drive to develop their firm into a world leader.

Thomas Haffa: had high hopes for deal

The takeover built on EM.TV's strength in the children's market, and exploited hopes for the internet market.

"We gain some of the most powerful and enduring kids' and family brands worldwide," EM.TV chairman Thomas Haffa said at the time.

"We will also obtain the global rights to characters and brands offering enormous potential across all media formats."

For The Jim Henson Company, president Charles Rivkin saw the deal as a "perfect fit for everyone concerned".

But EM.TV has run into trouble over the scale of debts run up through the takeover, and the purchase of rights to Formula One motor racing.

EM.TV, which has seen its share price plunge 95% in a little over a year, in April announced losses of 2.8bn deutschmarks ($1.2bn; �862m) for last year.

Pioneer

A successful Jim Henson Company management buyout would return to private hands a firm launched by one of the US's most respected media figures.

Founder Jim Henson was still in his teens, and a high school student, when he first appeared, in 1954, on television as a puppeteer.

Sesame Street, the ground breaking children's TV show for which Mr Henson was commissioned to create the characters, was first aired in 1969.

And six years later, with backing from Lord Grade, production began on The Muppet Show.

Mr Henson died in 1990.