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Recession bites German TV duo

Premiere, ProSiebenSat.1 hit by downturn

BERLIN — As Germany slips into recession, two of the country’s biggest TV companies exhibited further symptoms of the economic malaise Thursday.

Rupert Murdoch-controlled pay TV operator Premiere reported a 90% reversal in earnings from the Euros 100,000 ($125,000) net profit made in the third quarter of last year to a net loss of $111.4 million in the same period this year, squeezing yet further News Corp.’s bottom line.

Contributing to Premiere’s financial problems were soaring operating costs, which grew 21% to $340 million, mainly due to higher expenses for transmission, hardware and sales operations.

The troubled feevee platform saw revenue drop slightly to $305.5 million.

Meanwhile, Europe’s second-largest TV group, ProSiebenSat.1, announced Thursday a wide-reaching reorganization of its German operations in an effort to lower costs and streamline operations.

Most controversial will be the elimination of 225 jobs across all divisions in the group, about 7% of ProSiebenSat.1’s 3,000 German employees.

Berlin-based channel Sat.1 will move to new headquarters in Munich, which will also house the group’s two other main webs, ProSieben and Kabel Eins.

Sat.1 managing director Matthias Alberti is being promoted to co-managing director of the group’s German Free TV division, working along side Andreas Bartl. Guido Bolten, managing director of Kabel Eins, will takeover as head of Sat.1, while ProSieben’s vice managing director Juergen Hoerner will take the reins at Kabel Eins.

News channel N24 will remain in Berlin, as will Sat.1 main editorial department. Both will remain under the supervision of Torsten Rossmann.

The moves follow the purchase of pan-European broadcasting group SBS last year, which has left ProSiebenSat.1 in massive debt and in desperate need to lower expenditures as it integrates the two companies.

Execs at Premiere, meanwhile, hope to conclude talks with banks on debt restructuring by the end of the year. The paybox is suffering from a negative cash flow of nearly $80 million and a debt of $384 million.

Premiere’s growing losses contributed to News Corp.’s 30% drop in first-quarter profit. News Corp. was forced to write down $447 million in losses linked to its investment in Premiere. The paybox’s share price has dropped some 80% since January.

News Corp. has continued to tighten its control of the paybox by replacing top personnel with in-house execs. On Tuesday, chief programming officer Hans Seger ankled after eight years at Premiere. He was immediately replaced by Nicola Bamford, former director of channels and operations at BSkyB, now interim senior VP programming at Premiere.

Despite its difficulties, Premiere remains Germany’s main pay TV operator and a key buyer of Hollywood product. It has 2.4 million subscribers and is hoping to boost that number during the all-important Christmas season with new films such as “Shrek the Third,” “Harry Potter and the Order of the Phoenix” and local hit “Keinohrhasen.” Early next year it will premiere the seventh season of “24,” which, for the first time ever, will air in Germany at the same time as in the U.S.

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