Formula One battle nears truce

Kirch to play a dominant role in Formula One

A scuffle between European car manufacturers and media group Kirch TV over broadcast rights to Formula One could become an 'entente cordiale'.

Negotiations between the two sides are looking more likely after DaimlerChrysler indicated that it would be willing to talk to the German media company.

Kirch increased its control over F1 this week through its partnership with the troubled EM.TV.

Mr Hubbert believed Kirch's stake would mean the end of Formula 1

DaimlerChrysler's change of gear follows a war of words, in which the car maker's board member Juergen Hubbert prophesised "the end of F1".

Kirch initiated the truce after offering to talk to car makers about possible participation in SLEC - the holding company that controls F1 broadcast and commercial rights.

Broadcast rights

The quarrel erupted this week after Kirch acquired an indirect stake of 36.75% in SLEC.

Kirch managed the deal after agreeing to fund an option for EM.TV to increase its direct stake in SLEC by 25%.

Kirch is helping to rescue EM.TV after the film and television company ran into financial difficulties.

Through its rescue of EM.TV, it will acquire a 49% stake in a unit called Speed, which holds EM.TV's interest in SLEC.

The car makers - DaimlerChrysler plus BMW, Renault, Ford, Fiat/Ferrari, Honda and Toyota - are concerned because they hold no stake in F1 despite investing millions of dollars in the event each year.

Bernie Ecclestone, who retains 25% of SLEC, also opposes Kirch's move.

The fear is that Kirch group will be in too strong a position to negotiate the price of broadcast rights.

The car makers are also worried that Kirch might only make F1 available to viewers that subscribe to its pay TV, rather than to a larger audience on terrestrial television.

'Understanding'

To protect their interests, the car makers want to take their own share in the SLEC.

DaimlerChrysler spokesman Michael Pfister said carmakers had a "big interest in an agreement being reached on the broadcast of F1 free of charge".

Mr Pfister added the carmakers would need to come to an "understanding" with either EM.TV or Kirch to settle the issue.

Veto threatened

Kirch now has 30 days to finance EM.TV's $1bn purchase of the 25% stake or face a compensation suit from SLEC.

If the sum is paid, the International Automobile Association (FIA) may recommend the cancellation of SLEC's broadcast rights when it meets on March 22.

The veto by the FIA, which claims to protect the best interests of Formula One, would make SLEC effectively worthless.

If the FIA scrapped SLEC's broadcast rights, it could then licence them to another company, widely expected to be a joint-venture between Mr Ecclestone and the car makers.