Saban breaks into German TV with reworked $1.3 bil deal
Corrections were made to this article on August 13, 2003.
BERLIN — In his second attempt, Haim Saban has sealed a deal making him the owner of Germany’s biggest broadcaster. This is the first time a Hollywood player has broken into the terrestrial TV business not only in Germany, but in any major European territory.
Creditors of insolvent TV group Kirch Media voted unanimously Tuesday to accept the Egyptian-born, Israeli-American billionaire’s revived bid for ProSiebenSat 1, the awkwardly named company whose five networks control half of Germany’s commercial TV market.
Saban, who is backed by a group of equity investors, reportedly offered e1.18 billion ($1.33 billion). That includes $800 million for an 88.5% stake in ProSiebenSat 1, plus $300 million in fresh capital and the
assumption of $220 million in debt. German publisher Axel Springer currently holds the remaining 11.5% voting stake in the company.
The new owners also may have to pay $330 million to buy out the company’s publicly listed but non-voting shares, as mandated by German takeover laws, if the minority shareholders want to sell.
ProSiebenSat 1 has two main networks — ProSieben and Sat 1 — that carry a mix of German and U.S. films and series including “Enterprise” and “Sex and the City.” It also owns Kabel 1, dedicated to older skeins and movies from the Kirch Media archive; news web N24; and Neun Live, an interactive channel co-owned by USA Interactive’s Home Shopping Europe.
The group has been wracked by the advertising downturn as well as by Kirch Media’s bankruptcy last year, and has seen its ratings slide, to the benefit of rival broadcaster RTL.
But if the advertising market picks up next year, as predicted, the acquisition could be a bargain for 58-year-old Saban.
“We are very pleased that our offer has won the support of the creditor committee,” Saban said in a statement. “We look forward to completing the transaction.”
Saban’s previous attempt to buy ProSiebenSat 1 along with Kirch Media’s vast programming library collapsed in June after the rising value of the euro against the dollar made the deal unviable. That $2.25 billion offer included $1.45 million for the library, which is not part of the latest deal.
The entrepreneur, who pocketed $1.5 billion from the sale of his Fox Family Worldwide to the Mouse House in July 2002, immediately began sniffing around for other media companies in which to invest.
Just days after the Kirch deal crashed, he was linked to a consortium mulling a bid for either or both Carlton and Granada, the big two shareholders in Blighty commercial terrestrial channel ITV.
The pair plan a £2.7 billion ($4.4 billion) merger to form one ITV company, and it had been suggested Saban could wait and snap up the merged entity.
The liberal Jewish billionaire also used the hiatus to announce $100 million in contributions and pledges from the Saban Family Foundation, including a $10 million pledge to the Motion Picture & Television Fund.
But ultimately, he couldn’t simply walk away from the Teutonic broadcaster. Rumors of a revived bid began to circulate just 18 days ago and became solid Sunday, when Saban formally approached the Kirch creditors.
Unlike Saban’s first bid, made entirely with his cash, the latest offer is supported by a consortium of heavyweight venture capitalists, including Hellman & Friedman, Bain Capital, Quadrangle Group, Thomas H. Lee and Providence Equity Partners.
The exclusion of the Kirch library simplified the deal. After the collapse of the original Saban bid, ProSiebenSat 1 struck a long-term agreement for the choicest titles from the library. Kirch Media creditors originally hoped for a joint sale of ProSiebenSat 1 and the library, but evaluating the programming stockpile proved a difficult and contentious task.
Clearing out catalog
Now Kirch Media intends to sell off the remaining library; it has already entertained offers from local film and TV companies.
Saban’s new bid includes an offer of $8.5 per common voting share in ProSiebenSat 1. Specifically, Saban is expected to pay $575 million for Kirch Media’s 72% in the company, plus $225 million for a 16.5% stake
jointly held by Kirch Media and German publisher Axel Springer.
In addition, Saban will pump $300 million into ProSiebenSat 1, which has seen its profits dry up along with its advertising revenues, and assume some $220 million in debt attached to a high-yield bond.
Saban should face no obstacles in closing the deal, as he won regulatory approval from federal antitrust watchdogs the first time around. Unlike other interested investors, including investment groups Apax and Permira, Saban had completed due diligence of the group before his first bid broke down.
Kirch Media had indicated it was not in a hurry to sell the company and would not open its doors to new potential buyers wanting to pore over the company’s books.
Kirch Media creditors rejected a last-minute bid by Apax in favor of Saban.