DreamWorks SKG is one of several companies pondering the purchase of troubled Canadian animation house Cinar Corp, according to a report in Toronto's Globe and Mail newspaper.

Citing unnamed sources, the report says the studio is in league with California-based investment firm Triyar Capital and Michael Hirsh, the former CEO of Nelvana Limited, the Canadian animation house Hirsh co-founded and later sold to Toronto-based Corus Entertainment.

Hirsch left Corus in October 2002 to pursue other projects in children's animation. As well, the Globe report noted that a former executive of DreamWorks' Television Animation Division, David Simon, is on Cinar's board. All parties declined comment.

Montreal-based Cinar is a tempting takeover target nestled in a thorny complex of litigation. A producer of several internationally-sold children's animations, the company ran into trouble in 1999 when the company was accused of using Canadian writers as proxies for American writers thereby fraudulently receiving Canadian funding support.

The scandal spread as co-founders Micheline Charest and Ronald Weinberg and their CFO were accused of using the company as a personal bank. The company, once considered the star of Canadian animation, has yet to recover; Its share were delisted from stock exchanges in 2000. Last year, both Charest and Weinberg were fined by the Quebec Securities Commission and banned from acting as directors or executives of any Canadian public company for five years. Various efforts to purchase Cinar failed since the company's spiral. Still, the library retains its value.

Any DreamWorks-led deal would have to take into account rules concerning Canada's film and television production support system as well as Canadian content regulations. Presumably, that's where Mr. Hirsh fits in.