BERLIN — It’s official. With the acquisition of ProSiebenSat 1, Germany’s biggest commercial broadcasting group, Haim Saban has become the first Hollywood player to break into the Teutonic TV market.
The Israeli-American effectively replaces onetime media mogul Leo Kirch as one of the two main forces in the world’s second largest television market 16 months after Kirch’s vast media empire collapsed under billions of euros in debt.
Deal was finalized Saturday after Kirch’s creditor banks accepted Saban’s takeover bid last week. The actual transaction is to be completed this week. Agreement ends what had been a rollercoaster ride for Kirch Media and Saban, whose first bid collapsed in June.
Unlike his initial offer, Saban’s second bid was only for ProSiebenSat 1 and not the Kirch Media programming library, for which creditors had initially demanded $1.5 billion. The group has since acquired the choicest titles from the programming stockpile.
Although Saban will be at the helm of the new holding company, he has six equity investment groups on board sharing the costs of the $1.3 billion purchase. Saban will reportedly hold a 26% stake, with Hellman & Friedman, Bain Capital and Thomas H. Lee owning 19% each; Providence Equity Partners, 10%; Quadrangle, 6%; and Alpine, 1%.
Pressure to boost profits
The presence of venture capitalists means increased pressure on ProSiebenSat 1 to boost its profitability. Although the deal has been regarded as a bargain, the broadcaster has not been without its troubles.
Its advertising market share slid 8% to 43% in the first half of 2003 to the benefit of rival RTL Group, which controls 45%. Company’s main channels, ProSieben and Sat 1, have seen their ratings decline by 3% and 5%, respectively, since the mid-1990s.
The multichannel broadcasting group has also been plagued by internal strife: ProSiebenSat 1 chief exec Urs Rohner reportedly tried but failed last month to sack Nicolas Paalzow and Martin Hoffmann, the managing directors of ProSieben and Sat 1.
The news only increased the growing perception that the rudderless company was sinking into chaos and cast further doubt on the creditor banks’ much-ballyhooed plan B to run the broadcaster themselves after Saban’s failed first attempt.
While the group has managed to drastically cut costs and boost profits, overall revenues slipped 6% in the second quarter of the year.
Meanwhile, the Kirch Group’s former paybox Premiere, which caused the group’s downfall by hemorrhaging red ink, continues its recovery.
Premiere chief ups stake
In a move that signals growing confidence in the Teutonic pay TV market, Premiere chief exec Georg Kofler has upped his own stake in the multi-channel digital broadcaster to 20.46%.
Premiere was saved from bankruptcy in February when equity investment group Permira took a majority share.
The Premiere topper acquired 10.09% at the time but held an option to increase his share. Premiere and Permira declined to provide financial details of the transaction. As part of its takeover, Permira agreed to invest some $200 million into Premiere in addition to $150 million in bank loans.
Other shareholders include former Kirch creditor banks Bayern LB and HypoVereinsbank with 10% each as well as Austrian bank Bawag with 3.5%.