Film or Sports? German Mini-Major Constantin at Crossroads

SHADOWHUNTERS - Dead Man's Party - H 2016
ABC Family/John Medland

Shareholders are battling over the future of the film giant, producer of 'Look Who's Back' and Freeform's 'Shadowhunters.'

Strong second-quarter figures from Constantin Medien, announced Thursday, couldn't distract from the ongoing battle behind the scenes for the future of the German mini-major.

The struggle is between the company's two main shareholders: Dieter Hahn and former CEO Berhard Burgener, each of whom controls or represents just under 30 percent of shares in Constantin.

At its core, the fight is one between Constantin's jocks and its film geeks. Hahn, representing the jocks, thinks Constantin should focus on its sports business, spinning off or selling Constantin Film, its production and distribution business. Burgener, an unabashed cinema buff whose his private film collection is said to number more than 10,000 titles, is devoted to the movies.

The Hahn-Burgener battle came to a head at Constantin's shareholder meeting on July 7 when, after a 14-hour session, the two sides were unable to come to an agreement.

Constantin is a major player on the European film scene, as one of the continent's biggest producers — of homegrown fare like hit comedies Look Who's Back and Suck Me Shakespeer — and distributor of U.S. features including The BFG and Dirty Grandpa. But sports also makes up a significant part of the company's business. Constantin owns Sport 1, a German ESPN-style TV channel, and TEAM, the Swiss-based group that handles the marketing rights for the UEFA Champions League, a European club soccer tournament.

The two sides of Constantin's business have little to do with one another. In general, film is a larger source of revenue — in the first half of this year, it accounted for sales of €161.4 million ($180 million), compared to $114 million in combined revenues for the company's sports divisions. But profit margins can be slim, in part because Constantin reinvests in its own productions. The cost of the new season of Shadowhunters, a fantasy series that airs on Disney-owned Freeform in the U.S., meant Constantin's film business booked a net loss of around $400,000 for the first half.

Constantin's sports divisions, in contrast, were solidly profitable. So far, however, Sport1 has not emerged as a major player. The company missed out on bidding for rights to the Bundesliga, Germany's top soccer league, and could struggle to build its sports business without them.

As Hahn and Burgener fight for control of Constantin, the stock is suffering. Shares have climbed steadily from around €1.6 to €2.8 a share over the past year, but have slipped back in the past month. On Thursday, they were down nearly 4 percent at €2.44 ($2.72).