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Thursday, 1 March, 2001, 15:06 GMT
Formula One battle hots up
Finnish Formula One driver Mika Hakinen
Kirch to play a dominant role in Formula One
The financially troubled German broadcaster EM.TV and its rescuer, the Kirch media group, have tried to take control of Formula One, one of the world's biggest broadcast events.

Hours before the deadline, EM.TV exercised its option to buy a further 25% of SLEC - the holding company that owns the all important broadcast rights to F1 - lifting its stake to 75%.

The move was expected but has already been opposed by the car makers involved in racing and Bernie Ecclestone who retains 25% of SLEC.

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

Veto threatened

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

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

With either outcome it looks increasingly likely Kirch will be left with a huge but worthless investment.

Daimlers' dilemma

DaimlerChrysler has said it would meet with other car makers and Bernie Ecclestone on Friday to scupper the takeover by Kirch.

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

Juergen Hubbert, member of Mercedes Benz management board
Hubbert: "If Kirch has 75%... that's the end of Formula One"
DaimlerChrysler board member Juergen Hubbert said last Tuesday at the Geneva Motor Show the car makers want "to have nothing to do" with the German media company.

"If Kirch has 75% then that is the end of Formula One," said Mr Hubbert.

Later, he said, "I am totally unhappy with the situation... we want a third of Formula One."

The other car makers are Ford via Jaguar F1, Renault via Benetton, Fiat via Ferrari and DaimlerChrysler via Mercedes-McLaren. They invest hundreds of millions of dollars a year in the sporting event.

Their concern is that F1 will only be shown on subscription-based television, depriving them of the exposure of free-to-air broadcasts.

Option expires

EM.TV already held 50% of SLEC through a wholly owned unit called Speed with an option to buy another 25%.

The film and television company ran into financial difficulties after an aggressive acquisition programme last year, which included F1 and the Muppets, leaving it with huge debts.

Access to F1 racing is said to be a key factor driving Kirch's motivation to bail-out EM.TV.

Through Kirch's rescue of EM.TV, it acquire a 49% stake in Speed, which would give the German company an indirect stake of 36.75% in SLEC after EM.TV option was completed.

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See also:

27 Feb 01 | Business
Car makers may bid for F1
16 Feb 01 | Business
EM.TV rescue deal wobbles
06 Feb 01 | Business
Ecclestone may lose F1 rights
04 Dec 00 | Business
Joint F1 owner struggles
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