Equity funds taking over Germany's ProSiebenSat.1

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Equity fund groups Kohlberg Kravis Roberts and Permira were given the green light by the European Commission on Thursday to take over ProSiebenSat.1, Germany's second-largest television broadcasting group (HR 2/23).

The deal, which values the German media conglomerate at €5.6 billion ($7.4 billion), was cleared after the EC found that there were no antitrust risks from the takeover.

The EC's decision came down on the same day that ProSiebenSat.1 posted record pretax profits of €386.7 million ($506.7 million) in 2006 on income of €2.1 billion ($2.8 billion). That represents increases of 10.3% and 5.8%, respectively, over 2005's results.

The company's performance was slightly below analysts' expectations, according to German media reports. Dow Jones Newswires had predicted a turnover increase of 6.4% for 2006.

The upswing in the German ad market contributed mightily to the bottom line, but the nonbroadcasting activities of multimedia subsidiary SevenOne Intermedia also helped to "speed up the growth of the group" as a whole, according to a statement by CEO Guillaume de Posch.

Permira, based in the British Channel Islands, and New York-based KKR jointly control the Dutch SBS TV group, which is mainly active in the Nordic countries, the Netherlands and Belgium. Permira also controls All3Media, a U.K. TV production outfit and distributor of TV rights.

Berlin-based ProSiebenSat.1 operates five TV channels in Germany (ProSieben, Sat.1, Kabel 1, N24 and 9Live), mainly financed by advertising. It also controls about 45% of Germany's €3.8 billion ($5 billion) TV ad market. The takeover will allow KKR and Permira to extend their footprint in national TV broadcasters into the German free-TV market.

SBS already is one of Europe's leading broadcasting groups, operating commercial TV, premium pay channels, radio stations and related print businesses. The merged entity is expected to compete against the RTL Group, part of the Bertelsmann media empire.
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