Who'll buy Fox's kids?

Just two months after NBC announced that Discovery Communications will take over the net's Saturday-morning kids programming, Fox is close to signing a deal that insiders say will be worth a lot more than what NBC is getting.

Fox executives have whittled their choices to two animation studios, DIC Entertainment and 4Kids Entertainment.

Among other children's programmers said to be bidding were Nickelodeon and Canadian studio Nelvana. Nelvana was the first to lease a block of time from a major network, producing CBS's Saturday-morning lineup from 1998 to 2000. Nickelodeon currently produces CBS's lineup.

The price tag at Fox is said to be about $25 million per year, well over the $8 million per season Discovery is going to pay NBC. Fox Chairman Sandy Grushow predicted recently that NBC would be envious of the Fox deal once it was announced.

Fox executives are expected to decide this week. The network is getting out of the kids business after selling off its children's-programming unit to Disney as part of $5 billion sale of Fox Family Channel.

DIC, formerly owned by Walt Disney Co., has developed animated series Sabrina, the Teenage Witch; Inspector Gadget; Sonic the Hedgehog
and others. 4Kids is best-known for producing The WB's Pokémon

Insiders say the $25 million price tag will be a loss-leader for whichever studio is selected. Advertising revenue alone will not cover the cost, but both DIC and 4Kids want to use the Saturday-morning time to sell toys to young viewers. One executive close to the deal says the reason Fox could ask for so much more than NBC is Fox's built-in viewer-base: NBC's Saturday-morning lineup had been aimed at teens; Fox Kids has been programming to the more toy-friendly kids 2-11 demographic.

"The Fox real estate is just that much better real estate than what NBC had," says one executive close to the deal. "It's like buying a hotel property in Manhattan as opposed to New Jersey. You get the same amount of rooms and space, but you get much more money in Manhattan."