MARCH 1, 2001
EM.TV shares dive on F1 acquisition
THOMAS HAFFA's decision to take up the option he owns to buy 25% of SLEC from the Bambino Trust, an Ecclestone Family company, did not convince the financial community. Shares in Haffa's EM.TV dived 13% in the course of Thursday trading on the Neuer Markt in Frankfurt, an indication that the markets do not believe that the move is a good idea. Haffa had to decide to move by the end of January as otherwise his option would have lapsed. The purchase will cost Haffa $1bn which he does not have but rival German media baron Leo Kirch says he will guarantee the payment as part of a big deal to rescue EM.TV. The deal, if it goes ahead, will see Kirch buy the 50% of SLEC which is currently owned by Haffa and effective control of the company which controls the TV rights to F1. It remains to be seen whether the deal will be blocked by the Ecclestone Family and by the FIA. Both organizations may have the potential to stop the deal happening.
In addition the Formula 1 teams are coming out against the deal and are busy pointing out that all the long-term talk about who owns what in F1 pre-suppose that the teams are going to agree to a new Concorde Agreement in 2007. The Concorde Agreement is a contractual arrangement between the teams, the FIA and SLEC but if the teams do not agree to continue new arrangements would have to be made.
All this is still a long way off as Kirch and Haffa have to now prove that they have the money and that they are in a position to buy control of the sport from Bernie Ecclestone.
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