After months of speculation about the future of the beleaguered EM.TV media group, the German rights trader and merchandising empire announced on Wednesday that it would sign a rescue deal with the KirchGroup on the basis of their negotiations dating from December 4, 2000.
The deal was finalised just hours before an exclusivity agreement between the two companies was due to expire, which would have allowed other bidders, notably, German media mogul and Kirch rival Herbert Kloiber, to submit alternative offers.
As part of the agreement, to be turned into a detailed contract by March 15, Kirch will finance EM.TV's option to acquire an additional 25% in the Formula One holding company SLEC by the end of February, giving EM.TV and Kirch an overall 75% stake in the rights to Formula One events - the world's most watched motor sport.
In addition, the deal will give Kirch, Germany's second biggest media company, a 16.74% stake in EM.TV - equivalent to a 25% voting right, in exchange for giving EM.TV full control of the Junior television programme catalogue, a joint venture between the two companies.
EM.TV, once considered the rising star of the German media industry, ran into serious difficulties last year following a high-profile spending spree that saw the purchase of The Jim Henson Company for $680m and half of Bernie Ecclestone's Formula One for $1.6bn. After a series of accounting errors, the company was forced to restate its half year results, and in December finally fell completely from grace after slashing its 2000 profit forecast by 90%.
Shares in EM.TV opened 31.7% higher at Euros9.50 on Thursday as a result of the announcement. However, despite the increase, the company is still trading some 92% below its highest point last February of Euros119.5.