SEPTEMBER 19, 2001

Kirch groups agree to deal

The Pro Sieben Sat 1 Media and Kirch Media companies have agreed to merge.

THE Pro Sieben Sat 1 Media and Kirch Media companies have agreed to merge. The deal is subject to regulatory clearance from the German government but if all goes to plan will be completed by June next year. Dieter Hahn, the Kirch executive who has been dealing with Formula 1 issues in recent months, is to head the new company.

The deal means that despite unfavorable market conditions, Kirch has achieved its aim of floating Kirch Media and will now be bale to pay some of the huge debts it has built up buying rights. One of the biggest investments has been the acquisition of 75% of the Formula One group of companies. This has leased the commercial rights to Formula 1 for the next 100 years although Kirch now needs to find a way to keep the teams happy so that they do not simply head off and start a new championship with the backing of the car manufacturers. The FIA is somewhat stuck in the middle of this dispute as it cannot support one or the other because of the strict European Union competition regulations.

As part of the Formula 1 deal we understand that Kirch has agreed that TV coverage of the Grands Prix will remain free-to-air rather than becoming pay-per-view. The automobile manufacturers and the big F1 sponsors have made it very clear that they will not support the series if it goes pay-per-view.