BERLIN – German publishing house Axel Springer Verlag is threatening to interfere with media mogul Leo Kirch’s plans to acquire a majority stake in No. 2 German commercial web SAT1.
In an attempt to gain more control over the barely profitable channel, Springer chairman Juergen Richter spent $50 million in December buying out smaller shareholders in SAT1. By doubling Springer’s stake to 40%, Richter hopes to loosen Kirch’s grip on the web.
While Kirch makes money supplying programming to SAT1, the other partners have been disappointed by the channel’s sagging ratings and poor returns. Despite a costly attempt by Kirch-allied programming director Fred Kogel to reform SAT1’s programming strategy, the web’s ratings fell by 1.5% last year, pulling SAT1 down to fourth place among German TV channels. Richter also would like Springer to have more say in the editorial content of SAT1’s news and information programs.
Kirch responded last week to Springer’s challenge by announcing that he intends to purchase a 15% stake in the web from publisher Holzbrinck’s AV Euromedia and 1% from Ravensburger Film+TV, bringing Kirch’s share to 59%. Kirch is thus taking advantage of a change in German broadcasting law that went into effect at the beginning of the year which allows a single company to own more than half of a television network.
No ‘junior partner’
But Richter said last week that Springer may block the transfer of the shares to Kirch, which must be approved by 75% of the shareholders. Springer could exercise its right to purchase a portion of the shares, which would bring its stake to 46%. Richter told German weekly Der Spiegel that Springer “does not want to play the role of junior partner at SAT1 in the future.”
Kirch holds a 35% share in Springer, but the publishing house has resisted attempts by the media baron to exert his influence at Springer. As a partner in SAT1, Springer has disagreed with Kirch in the past. Together with other partners, Springer went to court in 1990 to try to block SAT1’s purchase of a package of 1,300 films from Kirch investor Otto Beisheim.
Holtzbrinck topper Stefan Ziffzer publicly confirmed the publisher’s intention of selling to Kirch, saying the deal had been made last fall. Ziffzer said he didn’t expect any resistance from the other Kirch shareholders, as Kirch would be able to buy up over 50% of the shares in SAT1 in any case.
“We will acquire a majority stake in SAT1,” Kirch spokesman Johannes Schmitz told Daily Variety. “The contracts are being drawn up.”