Shock to the system for Premiere

Stock drops as CEO Kofler plans exit from pay TV giant

Georg Kofler has resigned as head of Premiere AG in a surprise move that sent company stock tumbling amid uncertainty about the future of the German pay TV group.

Kofler will leave Premiere at the end of the month. On Monday, he announced he had sold his 1.2 million Premiere shares — equivalent to 1.3% of the company's total stock — for about €23 million ($31 million) last week.

He will be replaced as Premiere CEO by deputy head and company CFO Michael Bornicke.

The move comes just weeks after one of Kofler's greatest coups — wresting back the pay TV rights to Germany's Bundesliga soccer from one-time competitor Arena.

According to Kofler, the decision to leave was based on "personal life planning." With new pay TV rights contracts coming up for renewal ex-tending to 2012 and be-yond, the Austrian-born media veteran said he was "not prepared to continue my responsibility as CEO for such a longtime horizon."

Kofler has headed some of Germany's most successful broadcasters over the past quarter century, including ProSiebenSat.1, tele-shopping channel HOT and call-in quiz channel 9Live.

But Kofler said Monday he will be leaving the media business altogether.

"Over 25 years, I have been involved in television covering every aspect of the business," Kofler said. "I am convinced that for me, this is the right time for a change. As an entrepreneur I will build a new company group to be positioned in selected growth markets, however, not in the media industry. I have experienced the media business in many details — now I am looking forward to focusing my attention and energy on new topics."

Premiere shares slid sharply on the news and were down 3.8% to €17.9 ($24.4) by late afternoon Monday.

"Kofler's exit means a lot of uncertainty surrounding Premiere," said Christoph Schlien-kamp, a media analyst with Bankhaus Lampe. Schlienkamp added that it is unclear what Premiere's future strategy will look like.

Investors were apparently nonplused by Premiere's announcement Monday that it has acquired a 14.4% stake in auctioneering channel for €10 million ($14 million).

Kofler's resignation could mark a turning point for Premiere. A great deal of investor confidence in the company was based on Kofler's reputation as a top manager and dealmaker.

When Kofler took over as CEO in 2002, Premiere was on the brink of bankruptcy. He took on Premiere's debt, financing the move with a €100 million bridge loan. Kofler successfully engineered the company's takeover by private equity group Permira, putting up several million euros of his own money to acquire a 20% stake in the pay TV group. In March of 2005, he took Premiere public in a €1.2 billion IPO.

Kofler cashed out earlier this year, selling the bulk of his Premiere shares — 11.4 million shares, or 11.6% of the company's stock — for €186 million. At the time, Kofler said the sale was needed to pay off the €100 million bridge loan. He denied he planned to leave the company.

Premiere was on the brink in December 2005 after Arena and parent company Unity Media outbid Premiere for the Bundesliga rights. Premiere stock collapsed and subscriptions levels slumped.

Kofler the dealmaker again rescued the company, buying back the rights with a deal that gave Unity Media a 17% stake in Premiere. In one move, Kofler had recaptured the Bundesliga and eliminated his main competition. Arena shut down.

Following the deal, there were rumors that Premiere could become a takeover target. Without Kofler at the helm and with the U.S. equity crisis putting a damper on major PE deals, that scenario seems unlikely.

Now, as one of Europe's most respected media managers steps off the stage, the future of Germany's sole pay TV player remains an open question.