EM.TV Gains Control of Formula One Holding Company

EM.TV & Merchandising said on Wednesday it had exercised an option to lift its stake in Formula One racing to 75 percent, gaining control over broadcast rights to one of the world's most popular sporting events.

The move, clearly flagged by both the German media group and its Munich-based partner Kirch Group, comes in the face of opposition from car makers involved in Formula One racing worried about broadcast rights falling into the hands of a single television operator.

But EM.TV signalled that the deal was still not finally completed, saying in a statement that financing was linked to the completion of its rescue deal with Kirch earlier this month which was still dependent on ``various conditions.''

The deal is also likely to be opposed by both racing mogul Bernie Ecclestone, who retains a 25 percent stake in Formula One holding company SLEC and the International Automobile Association (FIA), which must approve the deal at its general assembly.

EM.TV, which already held a 50 percent stake in SLEC, the company that controls broadcast and commercial rights to Formula One events, said it had exercised a call option to buy a further 25 percent from Ecclestone for $987.5 million.

It said funding had been backed by Kirch, one of Germany's biggest private television operators.

Kirch, which operates both pay and free TV stations said Formula One races would continue to be broadcast on German free-to-air television but the assurance left car makers unmoved.

A spokesman for Germany's DaimlerChrysler said following the announcement the group stood by comments from board member Juergen Hubbert, who said earlier that Formula One would be dead if it fell into the hands of Kirch.

Opposition

Many of the carmakers involved in Formula One have opposed a single television company gaining control of SLEC because of concern that broadcast coverage could be limited to pay TV subscribers and have signalled a desire to take a stake in SLEC themselves.

Paolo Cantarella, chairman of the European Automobile Manufacturers Association (ACEA) and chief executive of Italian auto maker Fiat , said on Tuesday Formula One's five car makers were opposed to EM.TV taking control of SLEC.

ACEA members, BMW AG, DaimlerChrysler, Ford, Renault and Fiat which owns the Ferrari Formula One team, have made it clear they want to buy a stake in SLEC to secure the future of the Formula One racing circuit.

Wolfgang Reitzle, head of the British Formula One car maker Jaguar, which is owned by Ford, said earlier this week a deal giving control to EM.TV and Kirch would turn Formula One into a media spectacle and make the racing a secondary issue.

Kirch, which is backing a loan so that EM.TV can exercise the option, said last weekend it had the financing for the deal in place but has not named its lenders.

The privately-owned group has said the company is prepared to talk to the manufacturers to find a solution to their dispute and EM.TV said earlier in the week it was already in exploratory talks with the car makers over selling part of its SLEC stake.

As part of a rescue deal signed on February 15, Kirch bought a 16.74 percent stake in EM.TV and holds 25.1 percent of the debt-laden company's voting rights.