EM.TV kicks up a storm over plans for F1
Debt-ridden German media group EM.TV is today expected to increase its stake in the Formula 1 rights-holding company SLEC to a majority holding, despite growing opposition from the sport’s major players.
LONDON (Brand Republic) - Debt-ridden German media group EM.TV is today expected to increase its stake in the Formula 1 rights-holding company SLEC to a majority holding, despite growing opposition from the sport’s major players.
A number of the sport’s car manufacturers, including Ford, Mercedes Benz and BMW, protested when it was revealed that German media giant Kirch’s rescue of EM.TV would see it gain control of half of EM.TV’s share in SLEC, the commercial and TV rights holder for Formula 1 racing.
People close to Formula 1 are said to be concerned that Kirch’s involvement could see Formula 1 racing only available on pay-per-view TV. SLEC’s trustees have already warned Kirch that they have the right to veto the sale of its equity to a broadcaster.
Kirch will finance a $1bn (£691m) option held by EM.TV to increase its existing 50% stake in SLEC to 75%. It has also paid $550m (£380m) for a 16.75% stake in the company and half of its existing SLEC share.
EM.TV ran into financial trouble last year when investors discovered it had agreed the option with SLEC.
Shareholders lost confidence in EM.TV because it had spent $680m (£470m) buying the Jim Henson Company, home of The Muppet Show and $1.65bn (£1.14bn) in cash and shares for its 50% stake in SLEC.
This spending spree was followed by a profits warning, accounting errors and insider-trading investigations. Consequently, the company’s share price fell 90% from last year’s peak of €120 (£76.6) on Germany’s Neuer Markt.
This morning EM.TV’s share price fell 1% to €6.93 (£4.42).
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