Springer, the German publishing group, and Kirch, Germany’s largest film and TV company, on Tuesday announced that they had agreed to bundle their TV interests in a new holding company, to be called ProSiebenSat.1 Media.
The new holding, to be headed by Urs Rohner of ProSieben, will combine Sat1, the private commercial TV channel, and ProSieben Media, the listed TV group that comprises the channels Pro7, Kabel1 and N24. Its combined revenues were said by Kirch to total “some E2bn ($1.9bn), with pre-tax results of approximately E200m.”
The deal was said by observers to signal both Kirch’s success in bundling all of its TV interests under one roof and the likely end of Springer’s loss-making 15-year excursion into TV broadcasting.
The owners of ProSieben Media will hold 72 percent of the new group, while Sat1 shareholders will control 28 percent. Springer and Kirch already own Sat1 jointly, with 41 percent held by Springer and 59 percent by Kirch. Rewe, the German retailer that is a shareholder in ProSieben Media AG, will swap its holding for a 6 percent stake in Kirch Media.
Under the deal agreed on Tuesday no cash will change hands, with Springer converting its 41 percent stake in Sat1 into a 11.48 percent stake in the new holding, but with the option to sell that stake to Kirch – which will control the other 88.52 percent of voting rights in the new holding – from 2001. By then, the German government is expected to have either abolished or markedly lowered capital gains tax on the sale of such shareholdings.
The price Springer would receive for the stake was not disclosed and negotiations are still ongoing, but Arthur Andersen, the consultants, has valued Sat1 at DM4bn-DM5bn (E2.05bn-E2.6bn), thus valuing Springer’s 41 percent at DM1.7-DM2bn. Lehman Brothers acted as advisers to Kirch. Reuters