Kofler's exit signals start of new era


COLOGNE, Germany -- Georg Kofler was one of German TV's last corporate cowboys, a high-risk gambler who transformed the German industry. His surprise resignation this week as head of pay TV group Premiere had, for many, the mark of the end of an era, with the cowboy saying goodbye and the suits -- in this case Kofler's successor, Premiere CFO Michael Bornicke -- taking over.

Kofler's flamboyant public persona and dealmaking skills are credited with pulling Premiere back from the edge of bankruptcy in 2002, when he took over as CEO. In just three years, he renegotiated expensive film rights deals with reluctant studios, convinced PE giant Permira to buy the company and took Premiere public in a €1.2 billion IPO that was 12 times oversubscribed.

But his taste for brinkmanship almost sank Premiere when, several months later, he lost the rights to German top-league soccer, the Bundesliga, to newcomer Arena. Kofler pushed too hard, demanding the Bundesliga shut out Germany's free-to-air public channels -- particularly ARD's hugely popular soccer magazine "Sportschau" -- and give Premiere exclusive rights. The Bundesliga said no. Premiere stock dropped 50% overnight.

"The market had a mixed opinion of him," a London-based media analyst with UBS said. "Most people thought it was his fault Premiere lost the soccer rights, that Kofler misjudged the Bundesliga. Investors were impressed by how he turned the company around but there was always an element of distrust."

That might explain why Premiere shares, after dipping in the immediate wake of Kofler's resignation, quickly recovered by mid-week. Most observers see Bornicke as a safe pair of hands less prone to risky dealmaking and dramatic public pronouncements.

The new boss already has hoisted an olive branch in the direction of Germany's public channels. In an interview with German newspaper the FAZ, Bornicke said he "could live with" ARD's "Sportschau" if Premiere received more exclusivity with the Bundesliga rights. Kofler had called for "Sportschau" to be taken off the air or exiled to late night.

Bundesliga rightsholders the DFL gave an official "no comment" to any Kofler-related questions. Sources near the DFL, however, said in an interview that the league was "relieved" Kofler will not be part of the next round of rights negotiations.

"No one wants a repeat of 2005. The DFL would like to have strong partners in both free and pay TV and not face another all-or-nothing decision," the source said.

Kofler's resignation will likely have less effect on the company's negotiation with Hollywood studios. 20th Century Fox, Universal, Warner Bros. and Sony extended their existing output deals with Premiere last year and the other majors are expected to follow suit. With Arena shut down, Premiere is the only game in town.

Many observers see Kofler's exit as a sign that German pay TV has come of age.

"Kofler leaving now actually makes a lot of sense, because the pay TV business in Germany has gone from being a risky entrepreneurial business to being a more stabilized one," the UBS analyst said.

Bornicke admits to as much, calling himself a "marathon runner" compared with Kofler's skill as a "100-meter sprinter."

Bornicke also dismissed reports that Premiere is a takeover target. Arena parent firm Unity Media, France's Vivendi and U.K. pay TV giant BSkyB have been muted as possible suitors.

"There have been no offers, and no negotiations are under way," Bornicke told the FAZ.

But Premiere's new CEO is just as ambitious as his predecessor. In the next two to three years, Bornicke wants to more than double Premiere's profit margin, from about 10% now to 25%-30%. Some of that will come from such new services as Premiere's satellite service Premiere Star, which launches in September, and Premiere's Internet cooperation with T-Online. But the bulk will have to come through the bread-and-butter business of squeezing more money from existing subscribers.

"Increasing revenue per subscriber is our top priority," Premiere spokesman Stefan Vollmer said. "Germany remains Europe's toughest pay TV market but we have all learned a lot in the last five years (under Kofler's management) and we are now a much stronger, more efficient and professional company."

More efficient but, perhaps, just a little less fun without Georg Kofler at the helm.