Kirch creates German media giant

The merger creates Germany's largest listed media group

German television broadcaster ProSieben and its sister company, Kirch Media agreed to merge on Thursday, creating Germany's largest listed media group.

ProSiebenSat.1, whose shares slumped 15% on Thursday as investors gave the deal the thumbs down, said the new company would be listed as Kirch Media, with the deal set to be completed by June 2002.

ProSiebenSat.1 gave no further details, but analysts expect the new company to join the blue-chip German Dax index.

The announcement ends years of speculation about the floatation of Kirch Media, the TV rights unit of German media giant Kirch Group.

The deal allows the company to list without the expense of an initial public offering (IPO), giving it access to stock markets ahead of arch rival Bertelsmann's IPO in 2003.

Kirch Media brings Germany's biggest television rights trading business, including Formula One races, to the merger, as well as a production business and sports channel DSF.

ProSieben is Germany's top free-to-air broadcaster with Sat 1, ProSieben, Kabel 1 and N24 amongst its stable of channels.

Some analysts are concerned ProSiebenSat.1 and Kirch Media deal could be used to prop up the Kirch Group's loss-making division, KirchPayTV, which is 24.5% owned by pay-TV operator BSkyB.