News Corp. grows stake in Premiere

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News Corp. said Thursday it has boosted its holding in German pay TV platform Premiere just weeks after its initial investment, buying an additional 5.26% of the company to bring its total stake in Premiere to 19.9%.

News Corp.'s announcement sent Premiere shares soaring. Premiere stock was up 4.4% at €15.12 ($22.23) in late-day trading in Frankfurt.

News Corp. began its push into Germany in January, when it acquired 14.58% of Premiere from cable group Unitymedia.

Thursday's move also is certain to fuel takeover speculation at Premiere, which has been shaken by an ongoing struggle to secure key sports rights and security problems connected to its set-top decoder box.

"We are very happy with our current stake," News Corp. German spokesman Christof Schramm said when asked if the company was considering a majority takeover of Premiere.

Separately, U.S. investment bank Morgan Stanley on Thursday announced it had reduced its stake in Premiere from 5.46% to 0.26%. But the sale was unrelated to News Corp. A News Corp. spokeswoman in New York said the conglomerate has increased its stake in open market stock purchases.

Despite operating in Europe's No. 1 television market, Premiere has lagged behind pay TV operations in neighboring countries. Average revenue per user in Germany is far below levels seen in the U.K., France or Italy.

But James Murdoch, recently appointed chairman and CEO of News Corp.'s European and Asian operations, is bullish on the German pay TV market.

"We're looking forward to working constructively with Premiere's management on the growth and future direction of the business," Murdoch said.

Premiere CEO Michael Bornicke gave a hint of what direction that could be in a telephone conference last week. Bornicke pointed to News Corp. subsidiary Sky Italia as a possible model.

Since launching in 2003, Sky Italia has attracted some 4.2 million subscribers compared with Premiere's 3.65 million. Premiere reaches an additional 630,000 subscribers through sub-licensing deals with Arena.

Bornicke suggested that Premiere might work more closely with Sky Italia in the future, though he declined to say what form any cooperation might take.

A big question mark still hanging over Premiere is whether the company can hold on to its key programming asset: Germany's top soccer league, the Bundesliga.

The bidding on Bundesliga rights is set to begin early in the second quarter. Kirch has put up €3 billion ($4.4 billion) for the rights to the 2009 through 2015 Bundesliga seasons.

If all goes according to plan, the Bundesliga battle should be over by early summer.

Until then, it is unlikely that Premiere will provide the market with a clear forecast.
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