BERLIN — Citing strong earnings from its film trading business, German entertainment group Kirch Media on Monday posted a 42% rise in its first-half 2001 core operating profits.
Releasing interim results for the first time, Kirch Media said sales rose 15% to DM3.25 billion ($1.5 billion), largely due to the sale of rights to popular German first division soccer games.
Improved earnings from its film rights trading biz, meanwhile, pushed profits up 42% to $239 million.
However, Kirch Media’s net debt also grew by 42% to $2.05 billion.
Better than expected
Nevertheless, local analysts said figures were more positive than expected. “They’re not bad. It looks like their film trading is doing well and their net losses were not as big as we thought,” noted one analyst.
Although execs did not comment on the state of parent company Kirch Group or on its financially troubled Kirch Pay TV division, analysts say there are serious questions about the possibility of the Kirch Group channeling profits from Kirch Media into Kirch Pay TV.
Kirch Media’s free-TV network subsidiary ProSiebenSat 1 Media, with which it intends to merge next year, generates about 59% of total sales from advertising revenue. Company said merger plans with ProSiebenSat 1 were on track, with independent auditors to start work on valuations in November.
“Until now, 2001 has been a very successful year for us,” said Dieter Hahn, chief exec designate of Kirch Media, in a statement.
“The results clearly show the positive development and solid financial structure of Kirch Media,” he added.
Rights biz to improve
Hahn also predicted that margins in the film rights trading biz would continue to improve in coming months as the industry consolidates.
In what he described as a conservative forecast, Hahn said a full recovery in the advertising market was not expected until 2003.
Execs said company’s sports rights portfolio and distribution platform would provide a strong base for future growth. Kirch controls the rights to Formula One motor racing and to the 2002 and 2006 World Cup soccer matches.
Company just sold broadcast rights in South America for the 2002 and 2006 soccer finals for over $860 million.