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Kirch, Saban Reportedly Reach Deal

March 17, 2003|Mark Thompson | Reuters

FRANKFURT, Germany — Insolvent German media firm KirchMedia has agreed to sell its television assets to Hollywood billionaire Haim Saban in a deal worth about $2.2 billion, sources close to the talks said Sunday.

KirchMedia and a spokeswoman for Saban declined to comment.

The deal, which ends a year-long auction, would see Saban and his partner, French TV group TF1, buy a controlling stake in Germany's largest commercial broadcaster, ProSiebenSat.1 Media, and a film rights library.

After a year of sometimes high drama, the man who made his fortune with children's TV figures such as the Mighty Morphin' Power Rangers trumped an offer from publisher Heinrich Bauer Verlag, which had teamed up with German bank HVB Group.

The 58-year-old Hollywood mogul would control Germany's largest stable of television channels and biggest film rights library, marking a sea change in an industry dominated by a small group of state-run and private broadcasters.

KirchMedia creditors -- banks, insurers and Hollywood studios that are owed billions of euros and have the final say over the deal -- are set to approve the sale Wednesday, with closing expected within six weeks, sources close to the talks said.

"That meeting is really a formality, because the creditors have already authorized signing a contract along these lines," a source said.

The deal, worth $2.2 billion to KirchMedia's creditors, including HVB, Commerzbank and Bayerische Landesbank, is made up of a cash element and liabilities assumed by Saban and TF1.

That amount does not include the cost of any mandatory takeover offer the new owners may have to make to ProSieben's small shareholders.

German takeover law stipulates that an acquisition of more than 30% of a listed company triggers a full takeover offer, but there are certain exemptions.

Sources familiar with the negotiations say Saban and TF1 may seek a regulatory exemption by arguing that ProSieben has become a "restructuring case."

ProSieben in February reported a 40% drop in its core profit and warned that the weak economy could keep advertising revenue under pressure throughout 2003.

The new owners are likely to have to inject fresh capital. Some sources say they could commit about 300 million euros, or roughly $324 million, in new funding.

R.M. Rothschild & Sons is advising Saban.

UBS Warburg is advising KirchMedia in the deal.

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