Premiere pays $138 mil a year for soccer

Unitymedia holds 16.7% stake in broadcaster

BERLIN — Premiere chief exec Georg Kofler has confirmed that the pay TV broadcaster is paying Euros 100 million ($138 million) per season to German cabler Unitymedia for rights to top league Bundesliga soccer.

Deal was finalized Thursday, a day after Germany’s antitrust watchdog OK’d the agreement allowing Premiere to takeover Bundesliga rights through 2009.

In addition to the total $276 million for the next two seasons, Unitymedia also holds a 16.7% stake in Premiere acquired as part of a joint Bundesliga marketing deal inked earlier this year. The cabler is expected to sell the stake by 2009.

As part of the pact, Premiere has also extended its carriage agreement with Unitymedia, Germany’s second largest cabler, through 2013.

Unitymedia paid some $300 million for the 2007-09 Bundesliga rights with the hopes of launching a rival pay TV channel here but the venture proved too costly after just one year on air.

Unitymedia CEO Parm Sandhu, however, said the investment in Arena “has shaken up the market for premium content and kick-started Unitymedia’s digitalization, moving us to half a million digital cable subscribers today from 120,000 just 18 months ago. The scale of that impact is in no small part a result of the great job done by the Arena team in building our pay TV broadcast and satellite operations in record time.”

Arena customers will still receive the Bundesliga, but coverage will be produced and branded by Premiere, while Arena’s own production division has been dissolved.

The lengthy antitrust review that halted Premiere’s satellite marketing deal with Arena earlier this year forced Premiere to slightly lower its annual forecast. Company is expecting some $1.45 billion in revenue and a gross operating profit of around $125 million for the full year.

Premiere was likewise unable to reach initial second-quarter targets following the suspension of its satellite marketing deal with Arena.

The paybox posted a second-quarter loss of $45 million, an improvement over last year’s deficit of $191 million in the same period (which was largely due to a one-off accounting charge). Revenue in the second quarter dropped 15% to $316 million.

Kofler said the Bundesliga will also mean additional costs. “We have to create new momentum for marketing the Bundesliga practically from scratch. Premiere will therefore invest substantially in marketing and sales over the next few months.”

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