Germany’s digital duel at an end

BERLIN — Only 13 months after its launch, Germany’s first digital pay TV platform, DF1, is being dissolved, it was announced Thursday at a press conference in Berlin.

Pending the approval of antitrust and media authorities, DF1’s thematic channels will be absorbed by pay TV web Premiere as early as January 1998 (Daily Variety, July 28), managers representing Premiere shareholders told reporters.

When DF1 began broadcasting in July 1996, founder Leo Kirch predicted the platform would have 200,000 subscribers by the end of the year. Kirch, who spent some $6 billion on pay TV output deals with Hollywood majors, was confident that his near monopoly on pay TV programming would allow him to control the digital pay TV market in Germany.

Yet DF1 has attracted a mere 50,000 subscribers to date. Distribution was long hindered by Kirch’s failure to gain access to cable systems, but German consumers also balked at shelling out $600 for a digital decoder to receive a motley collection of specialty channels.

With losses mounting at DF1, Kirch chose to bury the hatchet with arch-rival Bertelsmann earlier this summer. Kirch and Bertelsmann had been battling for control of Premiere, a premium channel with 1.5 million analog subscribers. Premiere, which began digital pilot projects in February, represented dangerous competition for DF1. On June 23, Kirch and Bertelsmann unit CLT-Ufa agreed to take equal shares in Premiere.

Kirch Group managing director Dieter Hahn and CLT-Ufa managing director Rolf Schmidt-Holtz told reporters on Thursday that Kirch and Bertelsmann are “cooperating on every level” to develop digital TV in Germany by investing in Premiere. Premiere subscribers will soon be given the option of trading in their analog decoders for Kirch’s D-Box digital decoder, while DF1 subscriber contracts will be taken over by Premiere. The managers also announced that the Kirch Group, CLT-Ufa and cable gatekeeper Deutsche Telekom will each own a third of BetaDigital GmbH, a research company developing technology for digital cable television.

Premiere managing director Ferdinand Kayser said that Premiere will upgrade its programming and expand its digital services starting this fall, and that Kirch’s sports web DSF, in which Bertelsmann’s CLT-Ufa is planning to take a share, will create digital sports channels for Premiere.

DF1 will continue to operate independently until German and EU authorities formally approve the proposed merger.

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