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Kirch pulls up stake

Co. sells Constantin Film to Highlight

COLOGNE — The collapsing Kirch empire has sold its stake in production company Constantin Film in a $26 million cash-and-stock deal as it continues to fight insolvency, it revealed Tuesday.

The stake has gone to Swiss home entertainment and sports rights firm Highlight Communication. Constantin’s management board and two main shareholders, Bernd Eichinger and kidvidder EM.TV, welcomed Neuer Markt-listed Highlight as a valuable strategic partner.

The sale will not affect licensing agreements between Constantin and Kirch Media, which filed for bankruptcy last month. Kirch television channels account for about 40% of Constantin’s TV rights sales, while Constantin owes Kirch money for films it distributes theatrically.

Constantin also said it unwound the TV rights deals for movies “Fantastic Four,” “Silver Surfer” and “The Stars My Destination” from Kirch. Constantin is developing the pics with 20th Century Fox and sold the rights to Kirch in 1992. “We wanted to buy the rights back a while ago when we went public, but Kirch Group only recently agreed,” Constantin executive Peter Friedl said.

In the first quarter of 2002, Constantin sales grew 66% to $33 million. It reported profits of $2.5 million, compared with a loss of $5.5 million in 2001.

The Constantin sale is part of fallen media giant Kirch’s plan to unload assets in a last-ditch attempt to cut its massive debt. Kirch umbrella company TaurusHolding is teetering on the brink of insolvency after Rupert Murdoch’s U.K. satcaster BSkyB exercised a $1.54 billion put option against its stake in already bankrupt Kirch Pay TV on Monday.

TaurusHolding houses KirchPayTV, Kirch Media (also insolvent) plus the shareholding Kirch Beteiligung unit, whose minority assets in newspaper publisher Axel Springer and Formula One motor racing are being sold off.

BSkyB’s refund option wasn’t due until October. But exercising it early may put it ahead of Kirch’s long line of creditors, which means it might be able to salvage some valuable nuggets of the stricken empire.

(Reuters contributed to this report.)