Kirch to Continue Talks with EM.TV (updated)

German media giant Kirch Group said on Monday it was hoping to win more time, if necessary, to agree a rescue bid for debt-laden EM.TV as the field of potential suitors appeared to widen further.

But Kirch declined to comment on a report in the Financial Times that it was prepared to sweeten its bid for up to 16.74 percent in EM.TV & Merchandising and almost half of the firm's 50 percent stake in Formula One holding SLEC.

The proposed deal, announced in December, was supposed to be agreed by January 31, when an "exclusivity" agreement expires, but includes the possibility of a one-month extension.

"We assume that the exclusive talks will continue until the end of February if they are not concluded by the end of January," a Kirch spokesman told Reuters.

The Financial Times said Kirch was ready to take over an option which could require EM.TV to buy a further 25 percent of SLEC for about $1 billion from Formula One ringmaster Bernie Ecclestone.

If not exercised by the end of February, Ecclestone could force EM.TV to buy the stake from May, a deal EM.TV would struggle to finance.

EM.TV would not comment on the report but has indicated in the past that it would be ready to continue talking to Kirch beyond the end of January if it were simply a matter of agreeing the last few details of a deal.

But it is unclear whether Kirch would then be alone in talking officially to EM.TV.

With work on a final deal making slow progress, other possible suitors have begun taking soundings.

EM.TV supervisory board chief Nickolaus Becker and German media entrepreneur Herbert Kloiber met with representatives of U.S. investment bank Hellman & Friedman earlier this month in Geneva.

Industry sources said Hellman & Friedman was prepared to pay $700 million for EM.TV's SLEC stake, which cost EM.TV some 3.5 billion marks ($1.66 billion) in cash and shares last year.

The Financial Times reported that Walt Disney Co was also following events at EM.TV closely. The paper reported that Disney executives were interested in the possibility of acquiring the Jim Henson company, producer of the Muppets.

The purchase of Jim Henson last year, coupled with the SLEC stake, has swollen EM.TV's debt to some 1.12 billion euros ($1.04 billion), analysts estimate.