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Mon, Mar 25, 2002 - Page 19 News List

Germany's Kirch turns to sex, lower prices


Seeking to stay afloat and out of Rupert Murdoch's reach, the advisory board of the German media group Kirch on Wednesday boosted sex programming and lowered its sign-up price to salvage its Premiere service -- Germany's only pay TV offering.

With debts estimated at 7 billion euros (US$6.2 billion), Kirch managers have been scrambling with a series of money-earning proposals, including a possible sell-off of their domestic broadcast rights for the 2006 football World Cup in Germany for US$221 million.

At stake is whether the 75-year-old media mogul Leonard Kirch can keep control of his company or give up control of Premiere World to Australian media giant Murdoch, whose British Sky Broadcasting network has a 22 percent stake in Premiere.

Under a clause in the contract, Murdoch has the option of taking over Premiere World if it fails to show a profit by October 2002.

Kirch also has the option of buying back Murdoch's original stake of about 1.6 billion euros -- a stretch given the current money problems.

Premiere is currently losing about 2 million euros a day.

Georg Kofler, the fourth troubleshooter in 12 months to take a turn at a salvage effort, said Wednesday that Premiere would likely lay off 25 percent to 30 percent of its 2,500 employees, part of a plan to save 500 million euros a year.

The board's total restructuring plan would raise revenues by 1.5 billion euros by 2005 and put the company back into the black, the company said.

With the lowered sign-up price of five euros a month, Kofler said he hoped to increase the number of subscribers from 2.4 million to 3 million by 2003.

The new programming, called Premiere Start, includes series, pop music, children's programs and content from the Disney and Discovery channels. Erotic programming from Beate Uhse on evenings and Saturdays would push sales, as would football broadcasts from the Bundesliga.

Under Premiere Start, subscribers could also access pay-per-view. A film and sports package -- including 306 football games and Formula 1 racing -- would be available for 20 euros a month, Kofler said.

Kofler said the new structure could even open the way to going public in 2004, with a 294-million-euro tax and interest loss in 2003 dropping to an 80.8-million-euro loss the following year. Profits would total 144.8 million euros in 2005, he said.

Kirch's creditors include Germany's biggest banks as well as the US investment houses JP Morgan and Lehman Brothers.

Kofler's track record includes the turnaround of a local Munich channel Eureka TV in 1989 into the successful Pro Sieben -- Germany's third biggest commercial network.

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