Liberty Backtracks on KirchPayTV Stake

17 January 2002

In a move regarded as an olive branch to German regulators, Liberty Media has dropped its attempts to buy a 22% stake in ailing broadcaster KirchPayTV, a unit of German media giant Kirch Gruppe.

US cable group Liberty announced it intended to buy the stake – currently in the hands of Rupert Murdoch’s BSkyB – late last year, but the news received a less than enthusiastic response from regulators and from Kirch itself [WAMN: 23-Nov-01].

A filing with the German Cartel Office asking for approval for the purchase was withdrawn by Liberty on Wednesday. “We think it is preferable to pursue a commercial relationship with Kirch,” said the American group, which forged a TV alliance with the German titan in November [WAMN: 16-Nov-01].

The move is regarded by media observers as an attempt to get in the good books of the Cartel Office, which is applying considerable scrutiny to Liberty’s attempted purchase of Deutsche Telekom’s cable network – a deal that would transform the US firm into Germany’s largest cable operator. Fears had been raised about Liberty’s interests in both distribution and content.

In fact, some believe that Liberty never had any intention of buying the stake. Said one German media executive: “The pay-TV filing was a deliberately aggressive move that was certain to antagonise the Cartel Office so that, by withdrawing it, Liberty would appear to be making concessions.”

The Cartel Office, however, insisted it still had two major concerns – the merging of DT’s backbone network and a number of regional cable units (traditionally kept separate); and Liberty’s failure to support an open standard for digital set-top boxes. Liberty executives are due to meet regulatory officials today (Thursday) about the deal.

The Cartel Office has until February 28 to release its verdict.

[Regular WAMN readers may have noticed that this self-same 22% stake in KirchPayTV is at the centre of a rumoured ploy by Murdoch to topple Kirch. The plot thickens!]

News source: Financial Times