Company Town: Entertainment Upheaval : IN LIMBO : Deal Would Give Cartoon Unit to Disney : Animation: Company stands to get supplier of children’s programming with Cap Cities.

Does Walt Disney Co. need another animation division?

The company’s proposed purchase of Capital Cities/ABC Inc. would include the acquisition of Burbank-based DIC Entertainment, an almost wholly owned subsidiary of Cap Cities and a supplier of children’s programming to international and domestic markets.

DIC is known for programs such as “Where on Earth Is Carmen Sandiego?” “Inspector Gadget” and “Adventures of Sonic the Hedgehog.”

“If Disney is Tiffany’s, then [DIC] is pretty bargain basement, like Woolworth’s,” said Tom Sito, president of the motion picture cartoonists union, Local 839 in North Hollywood. “They’ve always had the lowest budgets and the poorest quality.”

Sito said that unlike Disney’s animators, DIC Entertainment’s animators are not unionized.

“Being a non-union studio, they’ve never had a great record of labor relations,” Sito said.

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The company declined to comment Thursday on the prospects for its future and Andy Heyward, DIC’s chief executive, was unavailable.

There is already at least one connection between DIC and Disney. Disney’s Buena Vista Home Video has a distribution deal involving some new products and elements of DIC’s library, said Tania Moloney, a vice president for publicity and event marketing at Buena Vista Home Video.

Some observers believe DIC can find a place in the new Disney universe. Larry Gerbrandt, a senior analyst at Paul Kagan Associates Inc., said the deal may mean some of DIC’s titles or characters would be exploited at Disney theme parks or made into movies or television specials.

“I’m sure they’ll be integrated into the Disney television operation,” he added.

DIC (pronounced “deek”) is a survivor. Heyward led a $70-million leveraged buyout of the company in 1987 from Radio-Television Luxembourg and French businessman Jean Chalopin, who co-founded DIC with Heyward.

Two years ago, the company formed a joint venture with Capital Cities/ABC Video Enterprises to produce and distribute live-action and children’s animation programming.

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Officials at Disney say DIC has been noted among the Cap Cities assets as a “fine animation company.” But Disney’s Tom Deegan, a vice president for corporate communications, said no one “has really focused on any special plans” for DIC.

Deegan noted that the planned takeover will take time to clear regulatory hurdles. That might put off any decision on DIC’s future for months.

“I don’t believe anybody in the company has had time to focus on any aspect of the acquisition beyond the broadest statements made on Monday,” Deegan said.