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Kirch eyes Canal stake, opens TV units, books

Media arm reports $4.3 bil in assets, public listing awaits

BERLIN — Germany’s Kirch Group on Thursday said it may buy a stake in France’s powerhouse pay TV giant Canal Plus to help stitch together a broader Euro network alliance.

Vivendi, the French company’s biggest owner, said recently it plans to cut its holding in Canal Plus to 40% from 49% and attract “a strategic international partner.”

Kirch Media, the commercial TV arm of the Kirch Group, said it wouldn’t buy the entire 9% that’s up for sale. It may instead opt for a cooperation agreement with the Gallic paybox.

“Kirch Media is currently considering whether it would be a good step to cooperate with Canal Plus or to buy a stake in it,” Herbert Schroder, a Kirch Media management board member said. A 9% stake in Canal Plus would be worth $820 million.

The interest from the Kirch Group comes several days after reports appeared that the other German media colossus Bertelsmann was interested in linking up with Canal Plus. Bertelsmann later denied those reports.

However, such cross-border hookups are destined to proliferate as Euro broadcasters decide to share the rising costs of buying and producing programming and developing digital and interactive technology.

Meanwhile, the Kirch Group moved one step further away from the secrecy that has traditionally enshrouded the company, unveiling for the first time annual figures for its core holding, Kirch Media.

For the fiscal year ending Dec. 31, Kirch Media, which contains the company’s TV stations, production, rights trading and film technology interests, recorded revenues of DM3.7 billion ($1.96 billion).

Some 95% of these revenues were generated by ad sales on its free TV stations such as Sat.1 and sports channel DF1, and from rights trading.

$4.3 bil in assets

Pre-tax earnings reached $71 million while earnings before interest, tax, depreciation and amortization (EBITDA), was significantly higher at $295 million.

Kirch Media’s assets make up $4.3 billion of the Kirch Group’s $6.4 billion, per the company’s own calculations.

“Following further growth, Kirch can look back on a successful business year,” Kirch’s deputy chairman Dieter Hahn said. “This development is continuing in 1999 when we once again expect good results.”

Hahn said the company’s bank debt for 1998 was around $1.95 billion, in line with other international companies.

Greater disclosure

The figures come as Kirch moves toward a proposed public listing of Kirch Media by the end of 2001, and shortly after the company took on board partners and with them, demands for greater company disclosure.

Saudi Prince Al Waleed bin Talal, Gotham merchant bank Lehman Brothers and Italy’s Fininvest each took a 3.1% stake in Kirch Media earlier this year.

Company honchos said the group is considering a cooperative agreement with commercial web ProSieben, which is owned 60% by Thomas Kirch, the son of Kirch Group founder Leo Kirch.

Speaking about the future of the Euro alliance formed with Italy’s Mediaset earlier this year, Eureka, Kirch’s managing director for programming Jan Mojto said that Eureka is interested in taking stakes in webs in Portugal, Greece and Poland.

Investments for programming in 1998 reached $1.43 billion. Kirch Media employs 2,667 people.

(Bloomberg News Service contributed to this report.)

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