Deal means Kirch is back in play

Mogul returns to German media via EM.Sport pact

Bavarian media mogul Leo Kirch, whose KirchGroup dominated the German TV scene until its spectacular collapse five years ago, returned to the spotlight Wednesday with a major share-swap deal with sports rights group EM.Sport Media.

The agreement will see EM.Sport Media acquire a 25.1% stake in Swiss media group Highlight Communications, held by Kirch-controlled company KF 15.

Under the terms of the deal, KF 15 will get €66.4 million ($90.4 million) in cash plus 9 million EM.Sport shares, which will give the Kirch vehicle an 11.5% stake in EM.Sport, which changed its name from EM.TV in the summer.

EM.Sport also has secured — for €2.7 million ($3.8 million) — an option to acquire KF 15's remaining 11.3% of Highlight, equivalent to 5.33 million shares. EM.Sport can buy up the stake between Jan. 1 and June 30 for €10 ($14.10) per share, or €53.3 million ($75.3 million) total.

Under the two-part deal, EM.Sport Media will take a 36.4% stake in Highlight. The Swiss company is an ideal fit for EM.Sport as it moves to focus entirely on the business of sports rights. Through its TEAM unit, Highlight manages the rights to European club soccer tournament the UEFA Champions League.

Highlight also controls leading German film producer-distributor Constantin Film, makers of "Downfall," "Perfume: The Story of a Murderer" and the "Resident Evil" franchise.

One consequence of the Highlight deal will be a change in management at EM.Sport. On April 1, following the completion of the deal, current CFO Andreas Pres will resign. He will be replaced by Highlight CFO Antonio Arrigoni.

Although Wednesday's agreement falls short of the megadeals that built — and, some would argue, ultimately destroyed — his media empire, the return of Kirch already is setting off a brush fire of speculation in the German media as to what he will do next.

Most media pundits point to German pay TV group Premiere. EM.Sport already does business with Premiere; its live sports production division Plazamedia recently extended a deal with Premiere through 2013. It also holds a 5% stake in Premiere's recently launched satellite service Premiere Star.

One possible scenario would see EM.Sport, Kirch and Premiere jointly bid for rights to Germany's top soccer league, the Bundesliga, when they come up for renewal this year.

EM.Sport CEO Werner Klatten has said he is interested in the free-TV rights to the Bundesliga, suggesting that he would not compete with Premiere for pay TV rights.
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