Kirch Clings On as Springer Promises Not to Sell ProSieben Stake

28 January 2002

Floundering German media empire Kirch Gruppe may be able to breathe a little easier, with reports that publishing giant Axel Springer Verlag will not cash in its 11.5% stake in TV unit ProSiebenSat.1 Media.

Under the terms of its investment, Springer could force Kirch to buy the holding back for a pre-arranged price of E767 million – a colossal mark-up on its current market valuation of E110m. Springer, itself suffering from the media downturn [WAMN: 13-Dec-01], could certainly use the cash.

Such a decision would throw debt-laden Kirch into chaos, as it would be unlikely to find the amount in question. However, insiders suggest Springer ceo Matthias Dopfner and media mogul Leo Kirch are negotiating a mutually beneficial agreement, with Kirch expected to be granted extra time.

The resolve to spare Kirch’s blushes may reflect the intimate relationship between the two companies. Springer, Europe’s largest newspaper publisher, is 40%-owned by Leo Kirch, the second biggest stakeholder behind Fride Springer. Not only that, Dopfner is chairman of ProSieben’s supervisory board.

News source: Handelsblatt (Germany)