Primetime for Haim and Kirch
Saban, TF1 takeover to shift Teutonic media industry
BERLIN -- U.S. billionaire Haim Saban and French TV player TF1 have all but won the bidding war for the assets of bankrupt TV giant Kirch Media, paving the way for the acquisition of Germany's biggest broadcast group.
Barring a last-minute hitch, the Saban-TF1 victory would effectively open up the clubby German media scene to a Hollywood player for the first time.
Teutonic publisher Heinrich Bauer officially bowed out of the two-horse race Wednesday.
Kirch Media is now in final negotiations with Saban to make the offer "contractually water-tight," Kirch managing director Hans-Joachim Ziems said.
Saban and TF1 are expected to pay $2.2 billion euros.
Fourth pillar
Saban's takeover of Kirch's multi-channel ProSiebenSat.1 and a vast programming library will mean a fundamental shift in the country's media industry, making the Egyptian-born Israeli American the fourth pillar of Teutonic TV alongside Bertelsmann's RTL and pubcasters ARD and ZDF.
"We are pleased that the Kirch Media management considers our offer the more attractive one," said Lisa Ramelsberger, Saban's spokeswoman in Germany. "We will continue to work hard in order to finalize negotiations."
Saban's chief strategy officer Adam Chesnoff arrived in Germany Tuesday to lobby Kirch's creditors and insolvency management but instead ended up hammering out the final details of the sale.
However, Saban's camp is tight-lipped about the negotiations.
"There won't be any celebrating until the contract is signed," one insider said.
Cautioned one Hollywood source: "It's not unprecedented for Saban to first elbow aside other bidders with high offers and then try to renegotiate when he is the only player left standing."
Options open
Meanwhile, Ziems said that KirchMedia would maintain relations with Bauer, which has not withdrawn its bid, and sees the offer as "an alternative if negotiations with Saban fail."
"We're all hoping Saban will bring a much needed fresh wind into the company and really do something exciting," a source at Kirch Media licensing division said. "People weren't too crazy with the notion of a Bauer takeover. The Bauer plan had foreseen a lot of cost-cutting, a lot of streamlining. Saban appears much more imaginative, but we really don't know what he has in store for us as he has his own licensing business, as does TF1. We'll have to wait and see."
Saban, who made billions producing and distributing pumped-up kid shows like "Mighty Morphin' Power Rangers," has lobbied long and hard for the prize, which in addition to ProSiebenSat.1 includes Europe's largest cache of film titles and TV shows.
Kirch's management described Saban's offer as financially better and, in terms of implementation plans, more attractive.
Creditor concerns
Unlike Bauer, Saban and TF1 want all of Kirch's main assets -- an offer that is said to have been more attractive to most of Kirch's creditors.
Bauer, who is partnering with Kirch lender HypoVereinsbank, wanted the other creditors to take minority stakes in the licensing business and, due to regulatory concerns, had recently insisted that HypoVereinsbank take a bigger stake in ProSiebenSat.1.
Bauer, which owns a 30% stake in rival web RTL 2 and dominates the TV guide market, would have faced regulatory inspection from federal or European Commission watchdogs, something Saban does not have to worry about.
As part of its joint bid with Bauer, which would have included some $220 million of its own money, HypoVereinsbank is said to have expected preferential treatment in recouping its loans to Kirch -- a clause rejected by fellow creditors.
The other lenders, which include Bayern, DZ Bank and Commerzbank, were also keen to get a cash payout instead of a long-term minority stake in the film licensing business, which was part of the Bauer plan.
Despite the advantages Saban's bid may have carried, insiders had expected a victory for Bauer, who had counted on strong support from Bavaria's conservative state government.
A spokesman for the publisher stressed it's still interested in purchasing the Kirch assets and its offer remains on the table, but added, "We are not prepared to take part in a bidding contest."
For the time being, Kirch Media and its creditors are welcoming the highest bidder.
Deal is expected to be wrapped up by the end of the week.
Shares of TF1 fell 8% to $21 in Paris on news of Bauer's exit from the bidding. ProSiebenSat1 shares hardly moved, closing at $5.70.
Collapsing empire
Kirch Media was put up for sale after Leo Kirch's empire collapsed last year under the weight of costly Hollywood film rights and sinking ad revenues.
The Bauer-led consortium was struck from the bidder shortlist last summer only to become the front-runner a few months later.
Saban jumped back into the fray earlier this year, overtaking Bauer with an improved bid.
Saban had also been interested in buying the makers of the Muppets, the Jim Henson Co., from German rights group EM.TV, but has apparently bowed out of that race. Disney now appears the most likely contender for those assets.
(Elizabeth Guider in Los Angeles contributed to this report.)
