The Muppets are seen as a fading asset

EM.TV, the heavily indebted German media company that bought the Muppets in 2000, has called off talks with a consortium of buyers led by TV tycoon Dean Valentine.

The firm is now reported to be putting out feelers to a range of potential bidders, including the Disney Corporation, which has twice attempted to gain control of the Muppets in recent years.

At the same time, Classic Media, an investment consortium led by billionaire Haim Saban, is sniffing around a minority stake in the Jim Henson Company, the firm that devised the puppet characters.

EM.TV, once one of Germany's brightest corporate stars, paid $680m (�424m) for Henson at the very height of the stock market boom.

Since then, as its fortunes faded, EM.TV has sold off chunks of Henson, but still has the Muppets on its books - an asset it needs to sell to keep up debt repayments.

The mighty fallen

It is not clear why the Valentine deal failed, but price is an obvious sticking point.

Analysts see the Muppets as a fading brand, highly fashionable and lucrative in the 1970s and 1980s, but increasingly marginalised since.

Disney has always believed in the Muppets' potential

Disney, however, has repeatedly stressed its belief in the Muppets, and has licensed them in various ways for its movie output and theme park empire.

According to media reports, Disney has previously offered some $70m for rights to the Muppets' characters and film back catalogue - a deal that would leave Henson's highly-regarded special-effects workshop out in the cold.

EM.TV, which needs to maximise its return from one of its biggest remaining assets, is likely to insist that any buyer take all of Henson.

Fall from grace

The Muppets have been the victim of the spectacular collapse of Germany's media sector.

As recently as two years ago, Germany boasted some of the most high-stepping media firms in the world.

EM.TV, although a small company, was hugely ambitious, and spent millions of euros on acquisitions of children's programming.

But its shares were battered along with the rest of the country's hi-tech sector - and all German media companies were caught up in the disintegration of Kirch, the huge Munich-based conglomerate that went into insolvency last summer.

Thomas and Florian Haffa, the two brothers who founded the company and ran it until 2001, are currently on trial for allegedly manipulating its share price.