EM.TV to sell assets amid earnings plunge
Investor groups mull legal action after announcement
Analysts and shareholders were stunned as EM.TV said Friday that earnings would stop at DM50 million ($22 million), less than 10% of the projected $234 million that in October chief financial officer Florian Haffa had maintained the company would attain.
Haffa stepped down Sunday when the company unveiled figures for the first nine months of 2000, showing operating losses of $61.44 million.
Legal action weighed
Investor lobby groups were considering legal action following the announcement, which unsettled other media stock. Several shares fell heavily, and Germany's normally hot Neuer Markt index dipped 8%.
Close ally the Kirch Group has finalized a deal to take 25% of EM.TV's voting stock in a share swap that gives Kirch 8% of founder Thomas Haffa's 47% stake and a further 17% created through a capital increase. That will be exchanged for Kirch's 50% stake in the companies' jointly run Junior TV. Deal is subject to approval by cartel authorities.
With stocks down 40% on Monday, the transaction is a bargain.
EM.TV's plight is bad news for other media firms on the Neuer Markt that are already battling lost investor confidence and skepticism over their development.
Launched in October 1997, the market allowed smaller companies to raise money on a German exchange for the first time. It was embraced by the media sector, which launched a plethora of companies. Among the personalities to emerge was EM.TV founder Thomas Haffa, who became famous for his entrepreneurial spirit and flamboyant lifestyle.
He remains the majority shareholder in the company.
