EM.TV to Swap Remaining F1 Stake for Children TV

EM.TV & Merchandising AG has agreed to swap its 16.7 percent stake in Formula One holding SLEC for media group Kirch's 50 percent in Junior TV and 21 percent share of Constantin Film, sources said on Friday.

Industry sources told Reuters that film rights trading group EM.TV would take full ownership in Junior TV, a joint venture with Kirch that owns a catalogue of children's programmes. It would also become the biggest shareholder in film production and rights company Constantin Film with a 37.4 percent share, up from 16.3 percent.

Kirch would end up with 75 percent of SLEC - the company which owns the media rights to Formula One for 100 years - with racing series organiser Bernie Ecclestone holding 25 percent.

The sources said the proposals must first be approved by the boards of both EM.TV and Kirch, which was likely to happen in the next two weeks.

A spokeswoman for EM.TV confirmed on Friday that the company is seeking to dispose of non-core assets as it focuses on children's programming, but she denied that there was any agreement yet with Kirch. The proposal was just one of many being considered by the group, she added. Kirch and Constantin Film declined to comment.

At 13:35 GMT, shares in EM.TV were down 4.8 percent at 1.40 euros, while Constantin Film fell 17.5 percent to 6.93 euros.

Constantin shares fell after the company issued a profit warning late Thursday, saying it expected earnings before interest and tax (EBIT) in 2001 of two to five million euros ($1.8-$4.5 million) instead of 9.2 million euros. It added that it was delaying distribution of nine new movies until next year.

For privately owned Kirch, the transaction comes ahead of merging its Kirch Media division with its majority-owned German listed TV broadcaster ProSiebenSat.1.

Kirch has said it will include the assets of Formula One into the merged entity. It is due to provide first-half results for Kirch Media on Monday.

Kirch gained control of the rights to the motor racing series earlier this week after it raised its stake to 58.3 percent from 36.8 percent by exercising an option to convert a $1.07 billion loan into stock as agreed with EM.TV in March.

Last year, EM.TV overextended itself by buying the rights to Formula One and Jim Henson's Muppets, which brought it to the brink of collapse.

In the second quarter of 2001, EM.TV posted a pre-tax loss of 127 million German marks ($59.2 million), partly due to interest costs and write-offs.