Internationalmedia's cancellation of its proposed merger with Spyglass Entertainment has had a "knock-on" effect for rival German listed media company Splendid Medien, which saw its stock price plummet over 23% in trading on Wednesday morning.

Splendid ended trading on Frankfurt's Neuer Markt at Euros 2.50 on Tuesday evening (March 5), but dropped by Euros 0.58 during trading on Wednesday morning.

The downturn in Splendid's share price came after the company's announcement that it will effect a Euros 16.3m write down on its shares in Internationalmedia (IM) which were due from its transaction late last year to sell the 49% stake held in Initial Entertainment Group (IEG).

As an ad hoc communique explained, "the shares in Internationalmedia AG due to Splendid Medien AG were valued at the time of the transaction at the then current price of Euros 22.18. Due to the events announced yesterday by Internationalmedia AG, Splendid Medien AG reduced this value to Euros 7.0."

Splendid added that "taking into account the value correction of the investments", the group's liquid assets now amounted to Euros 7.7m and further noted that because of the write down on the IM shares, the pre-tax earnings (EBT) of Euros 1.5m announced at the end of January and confirmed by the expected annual figures for the financial year 2001, would now be "correspondingly weakened".

Commenting on the fall of IM's share by over 60% on March 4, HSBC analysts Markus Wallner and Marc Roeder argued that "this reaction seemed to be exaggerated, with investors particularly nervous in the wake of the Enron accounting scandal. This sentiment could only be revised if the company is able to convince the financial community of its working business model in the analyst meeting which will take place on March 14".

Before that meeting, new developments may be announced after a sitting of IM's supervisory board today (March 6). According to the private bank Merck Finck & Co., in a first reaction last Sunday, the supervisory board had refused to accept CEO Florian Bollen's offer to step down from the management board.