EM.TV Still Recovering from F1 Deal Losses

German media firm EM.TV & Merchandising posted sharply lower first quarter core earnings and sales on Friday as it took off its books huge assets divested over the past year.

The television rights and merchandising firm said its first quarter earnings before interest, taxes, depreciation and amortisation (EBITDA) slumped to 0.4 million euros from 80.7 million euros ($75.4 million) because of the disposal of its stake in the Formula One motor racing business.

However, on an adjusted basis - stripping out Formula One and other assets sold in 2001 - the 0.4 million euros earnings in the first quarter 2002 compare with a 5.9 million euros EBITDA loss in the first quarter a year ago, EM.TV said.

"The improvement in operating earnings on a comparable basis is due to substantial reductions of costs and write-offs," the company said in a statement. "The restructuring of the group begun in 2001 is proving successful."

"For the second half of 2002, the executive board expects an upturn in the markets EM.TV is involved in," EM.TV said.

EM.TV, once a high-flying star of Germany's tech-loaded Neuer Markt segment, but now fallen close to penny-stock levels, owned a majority stake in the Formula One racing car business a year ago which it consolidated into its own books.

In the course of 2001, German media firm Kirch took over most of the Formula One business in a series of deals which saved EM.TV from collapsing under its debt, but contributed to Kirch's own insolvency earlier this year.

EM.TV reiterated it planned a major asset sale in the course of 2002 to repay maturing debt. The largest asset the company may part with is The Jim Henson Company, owner of the Muppets and Sesame Street, which EM.TV bought in 2000.

Sales of EM.TV were down to 41.8 million euros, from 107 million euro a year ago, or 58.6 million euros on a comparable basis, the company said. Net losses fell to 24.5 million euros from 50.2 million euros.