EM.TV rescue doubts grow

EM.TV owns 50% of Formula One racing

Shares in crisis-hit German media giant EM.TV have fallen 10% following reports that a rescue bid by rival Krich has stalled.

The Wall Street Journal said Kirch's bid to buy almost half of EM.TV's 50% stake in Formula One holding company SLEC was making painfully slow progress and that the latest round of talks had broken up in acrimony.

EM.TV shares plummeted on the news, falling as low as 4.03 euros in early trading, down 28% from Thursday's close and 97% below their February 2000 all-time high of 120 euros.

The stock recovered some territory later and by early afternoon was down 11%.

The company, which distributes films and owns the rights to the Muppets, denies that the deal with Kirch is in trouble but a company source said it was still unclear whether agreement would be reached.

"Keeping options open"

"The deal is not done and dusted. Kirch is keeping all of its options open," the source said.

Asked about the progress of the talks, a spokesman for EM.TV said: "Everything is running completely as normal."

EM.TV still aimed to complete negotiations with Kirch by the end of January.

A Kirch spokesman said there were no significant new developments but that negotiations were proceeding.

Last year EM.TV grabbed headlines by buying the Jim Henson Company, maker of the Muppets, for $860m.

It then paid $1.65bn in cash and shares for its 50% share in the Formula One holding company.

If the Kirch deal goes through, it will get a provisional 16.74% stake in EM.TV and a 25% voting right.

But The Wall Street Journal said EM.TV supervisory board chief Nickolaus Becker and Kirch Deputy Chief Executive Dieter Hahn have clashed over terms of Kirch's bid.

Mr Becker is pushing for a better price than Kirch has offered for the Formula One stake, it said.

Insider-trading probe

A December profit warning by EM.TV triggered a rout in the Neuer Markt and fuelled a crisis in investor confidence in the technology-rich index.

To add to the company's troubles, regulators have begun a formal insider-trading investigation.

The Munich public prosecutor is also conducting a separate probe into share dealings by EM.TV top managers including Mr Haffa and his brother Florian, the group's former chief financial officer.

And the company faces a slew of lawsuits from shareholders who accuse management of concealing its financial woes.

EM.TV has insisted that it always acted in good faith and on best information.

Formula One promoter Bernie Ecclestone, who owns the other 50% of SLEC, has an option to sell a 25% stake in SLEC for nearly $1bn to EM.TV by the end of May next year.