A Premiere stake

CLT/Ufa agrees to sell part of pay web to Kirch

BERLIN -- After weeks of negotiations, a preliminary agreement has been signed for CLT/Ufa, an affiliate of media heavyweight Bertelsmann, to sell a part of its stake in pay TV web Premiere to the Kirch Group, the business daily Handelsblatt reported Wednesday.

According to the paper, Bertelsmann will retain 5% of its stake in Premiere, selling the remaining stake to Kirch, a deal that previously was rumored.

Both companies denied that any contract had been signed, but they reported significant progress in ongoing talks. "We are basically agreed on a deal," CLT/Ufa spokesman Mathias Wulff told Daily Variety. "And we expect to be finished within two weeks."

The paper reported that Bertelsmann will sell 32.5% of its 37.5% stake to Kirch and that Kirch will now look for a new partner to take over the 37.5% share of French pay TV operator Canal Plus.

50-50 stakes

According to Wulff, CLT/Ufa is in a position to sell up to a 50% stake in Premiere. Although media watchdogs never greenlighted 50-50 ownership of the station by Kirch and Bertelsmann, these businesses paid Canal Plus at the end of 1998 for its stake, splitting it to give both partners 50-50 stakes in Premiere.

The deal would leave Kirch in control of the local pay TV market and free to combine its digital platform DF-1 with Premiere.

After the European Union's ban of a merger of DF-1 and Premiere last May, there is expected to be no great resistance to the merging of the two platforms as long as Bertelsmann and Kirch, which combine to control more than 90% of local ad revenues, are not working together. Previously, it was feared the former rivals, once wed digitally, would collaborate on free TV.

The paper said Premiere, as previously reported, would then be moved from its present location in the north of Germany in Hamburg to Kirch and DF-1's headquarters in Munich at the other end of the country.

Bertelsmann is interested in maintaining a stake in Premiere, which has over 1.7 million subscribers, to ensure it later can sell its rights to the web.

DF-1 has more than 330,000 subscribers, and Premiere more than 450,000 for its digital platform PremiereDigital.