NOVEMBER 10, 2000

Any minute now...

ON Friday morning Formula 1 bosses were anxiously watching the Frankfurt Stock Exchange as the share price of Thomas Haffa's EM.TV company continued to fall. The company lost nearly five percent of its value in morning trading, following drops of 8% on Wednesday and another six percent yesterday. With just a few hours to go before trading stops for the weekend, Haffa's situation is looking increasingly unstable and while the pause will give him time to think, it will also give those looking to bid for EM.TV the chance to organize themselves.

The last month has been disastrous for Haffa. In mid-October EM.TV shares were trading at around 60 Euros ($51). The company was valued at $6.3bn. This was down from a high of 120 Euros ($105m) in the Spring and Haffa was looking to reorganize the company by selling off his 50% share in Bernie Ecclestone's Formula One group of companies in the hope that the slide in share value would stop if he concentrated on EM.TV's core businesses of selling cartoons and merchandising cartoon characters. Accounting errors and lack of confidence in the company have resulted in a collapse in share prices which hit 27.60 Euros ($23) on Friday morning. The value of the company has dropped to around $2.8bn and it is absurd for Haffa to try to negotiate to sell his 50% of Bernie Ecclestone's Formula One Holdings for $2bn as he was hoping to do.

It now makes sense for the European car manufacturers who want to buy the F1 shares to make a bid for the whole EM.TV company and then sell off the huge EM.TV cartoon library and merchandising operations to pay for the purchase of the F1 business. Alternatively, a large media company such as Disney or Time Warner could buy EM.TV and sell off the F1 assets to fund the purchase of the cartoons.

Haffa controls a majority of the shares in the company but the stock market is clearly showing that there is no confidence in the current structure of management and he will be coming under pressure to make way for a new management to rebuild the company. It is in his interest to do so as he is losing more and more of his fortune as the shares drop. Analysts reckon that if the company is valued on its assets the share price should be around double its current value.