Germany's Premiere IPO Oversubscribed Twelvefold

18 March 2005

Has the tide in Germany's longstanding bear market turned with Wednesday's spectacularly successful initial public offering of stock in pay-TV station Premiere?

The event was hailed by analysts and investors alike as the most successful stock market debut in several years, with shares over-subscribed by a factor of twelve.

Other IPOs over the long, lean period have been compelled to compromise on price to ensure a full take-up. Not so Premiere, whose shares were snapped-up at the top end of their price range and closed the first day of trading at €31.80 ($42.69; £22.16) - twelve per cent up on their issue price.

Premiere is one of the prime surviving media assets of fallen tycoon Leo Kirch whose empire crumbled in 2002. But the broadcaster has yet to prove its business model will generate profits, revenues being highly dependent on the rights to air soccer matches.

Sales revenue projections indicate a customer base of around five million - 1.5m more than the company currently boasts. High subscriber acquisition costs mean that Premiere makes money only on second-year (and longer term) customers. Although churn rates remain high, Premiere hopes it will move out of the red later this year.

Analysts greeted the broadcaster's successful debut as a sign of better times to come for the the nation's long-depressed overall market.

Data sourced from Frankfurter Allgemeine Zeitung; additional content by WARC staff