Germany’s ProSieben sets its share price

BERLIN — ProSieben Media, the first German television group to go public, announced on Monday that it will sell its shares at a rate of between 66 and 72 marks ($38.37 – $41.64).

The final price of the shares will be fixed on July 5, two days before ProSieben’s initial public offering on German stock exchanges.

Through the sale of 17.5 million preference shares, the media group expects to raise as much as 1.26 billion marks ($729 million), most of which will flow into the coffers of shareholder Thomas Kirch, son of media mogul Leo Kirch. Thomas Kirch will control 60% of the common stock, while retailer Rewe will own the remaining 40%. Voting rights will remain exclusively with Thomas Kirch and Rewe.

ProSieben’s flagship network, Pro7, is ranked third among Germany’s commercial webs, and is the territory’s most profitable. The group’s before-tax profits came to $103 million in 1996, an increase of 59% over 1995. Given ProSieben’s strong performance, most observers consider the share price to be relatively low.

ProSieben chairman Georg Kofler hopes to benefit from the successful flotation of German telco Deutsche Telekom earlier this year. With the exception of Telekom, said Kofler, the initial public offering of no other German company “has generated as much public interest as ProSieben’s.”

The company has conducted an aggressive marketing campaign for the flotation over the last several months, and Kofler expects the demand for shares will be strong.

But public interest in ProSieben stock has also been dampened by speculation in the German press that Leo Kirch, who supplies Pro 7 with about half of its films and series, may raise the price on programming sold to Pro 7 after the flotation, cutting the returns on the non-voting preference shares.

Kofler insists that ProSieben operates independently of the Kirch Group. No shareholder, including Thomas Kirch, “could force the management or supervisory board to agree to any business transaction that would harm the company or its shareholders,” said Kofler.

According to Kofler, the ProSieben group — which also encompasses weblet Kabel 1 and a collection of video, merchandising and multimedia ventures — will use the income from the flotation to purchase more “attractive programming” and possibly to acquire other webs.

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