Intermedia and Spyglass Entertainment have called off their imminent merger, Intermedia announced on Monday in an ad hoc disclosure to Frankfurt's Neuer Markt.

Intermedia said that Nigel Sinclair, Guy East and Moritz Borman will continue in their positions as co-chairmen of Intermedia. East and Sinclair had been expected to step down to make way for Spyglass co-chiefs Gary Barber and Roger Birnbaum.

Intermedia warned that it will be posting a pre-tax loss for 2001. The company had been due to announce year-end figures for 2001 on a provisional basis last Thursday but will now unveil full year results on March 14.

Chief executive officer Florian Bollen has offered his resignation from the management board.

The company said that it agreed to terminate merger negotiations this weekend after Intermedia decided to internally reorganise. Intermedia confirmed it is relocating further operations from London to Los Angeles, as well as adjusting accounting principles, as part of its strategy to focus on high-profile event movies.

The company said its "slightly negative" earnings reflected effects from changes in accounting principles. The shift will result "in the postponement of revenues and profits as well as one off charges for the reorganisation".

But Intermedia's nine month results failed to hit revenue targets. Previous estimates had put 2001 sales at Euros 280m instead of the initially anticipated Euros 355m, with EBIT down from Euros 47.2m to around Euros 25m.

The acquisition of Initial Entertainment Group, which Intermedia announced last year, is unaffected by this development.