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Kirch Plans Pay TV Venture:

June 24, 1997

MUNICH — Germany's Kirch Group and CLT-UFA of Luxembourg said they plan to form a German pay TV joint venture and agreed to use a single decoder box for transmissions, ending a long-running dispute between the media companies. The companies agreed to cooperate in a venture that will provide Kirch Group with more investment and the Bertelsmann and Luxembourgoise de Telediffusion joint venture with a strong partner in digital television, analysts said.

The agreement marks the first time two of Europe's largest media companies have agreed on a uniform digital-decoder technology for the German market, paving the way for the two to reach the economies of scale needed to make this fledgling market profitable, analysts said. The agreement is expected to lighten some of the costs Kirch has been experiencing in its foray into digital television. A report, subsequently denied by Kirch, published in March by competitor Bertelsmann said the Munich-based media company faced losses of up to $3.46 billion from its DF1 digital television venture.

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