Premiere splitting into 3 divisions


COLOGNE, Germany -- Germany's top pay television group, Premiere, is planning a major restructure in the face of growing competition from cable, satellite and telecommunications companies moving into pay TV.

In an interview with the Financial Times of Germany on Monday, Premiere CEO Georg Kofler said the group was reshuffling its operation into three separate, and mostly independent, divisions.

The first will handle the acquisition of film and sports rights, the second focus on customer service, marketing and distribution while the third division, Premiere Interactive, will be in charge of expansion into such new media operations as sports betting and mobile TV.

Kofler said he wouldn't rule out the possibility that "these divisions could one day be standalone companies," a comment that many analysts are calling a strategic move to stave off a possible buyout of Premiere.

Premiere has emerged as a takeover candidate after pay TV newcomer Arena snatched up the lucrative rights to Germany's top soccer division, the Bundesliga last December. Premiere lost 124,000 subscribers in the first half of 2006 as soccer fans jumped ship. The company's stock also took a dive, dropping from about € 25 before the Bundesliga deal to a low of just over € 7.

The sagging share price stirred speculation that Arena or its parent, cable group Unity Media, might make a bid for Premiere. If Premiere were to split into three separate companies, it might make the group less attractive to possible suitors.

Premiere shares jumped on the restructuring news, trading up 2.3% at € 11.93 ($15) by mid-day Monday.

By restructuring, Premiere hopes to better position itself as new competitors move into the German pay TV market. In addition to Arena, several German telecommunications, cable and satellite companies are starting to add pay TV services to their product lines.

Kofler said that dividing Premiere's operations into three separate divisions will better enable the group to sell services to third parties -- marketing other firm's pay TV platforms for example or selling on Premiere's film and sports rights.

Premiere already has proven it can work well with its competitors. About half of the 900,000 subscribers that have signed on to Arena's pay TV service have come via Premiere, which markets Arena's platform to cable customers as part of a co-operator agreement.

Arena has found it much harder to win over subscribers to its satellite-delivered service, where the company is going it on its own.

"Even the loss of the Bundesliga has not substantially damaged Premiere," Kofler said. "For others, it is unbelievably expensive to build up what we already have."

Kofler added that Premiere will be looking to expand by partnering with, or acquiring companies with expertise in certain key areas of the pay TV business, but declined to give details. Without making any forecasts, he said Premiere stock will become "more interesting" for investors after Nov. 7, when the company unveils its third-quarter figures.
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