01 September 2000

The sale by privately owned German company KirchPayTV of its 3.1% holding in BSkyB triggered a six per cent fall in the latter's share price yesterday.

Kirch’s move was motivated by a decision to repay debt and fund digital expansion, ending the honeymoon phase of the commercial relationship between two buccaneering media tycoons - Rupert Murdoch and Leo Kirch. The partnership was formed in December 1999 when Murdoch took a 24.5% stake in KirchPayTV, paying DM1 billion in cash plus shares in BSkyB equivalent to a 4.3% holding.

Kirch began to unload its Sky shares in June and is now in discussion with with financial investors about small equity holdings in KirchPayTV. Its latest trading update revealed 2.2 million active subscribers, of whom 1.5m are digital.

Growth continues to be fuelled by access to sports - in like vein to BSkyB - with Kirch holding exclusive pay-per-view rights to the German football league and most live Champions League games. The company expects to launch interactive services early in 2001.

News source: Financial Times