Friday March 30th, 2001
By Marijn van der Pas
Germany's anti-trust watchdog said on Friday the Kirch Group must spin off the German television broadcasting rights to Formula One races in a separate company that will auction the rights.
"The broadcasting rights will be spun off into a separate company and they will then be auctioned," Thomas Mehler, a spokesman for the Bundeskartellamt, told Reuters.
"Kirch, or one of its units, could buy the rights from this company but this would then be considered a merger and therefore subject to regulatory approval," he added.
The regulator said it had approved Kirch's purchase of 49 percent of the 50 percent stake that its partner EM.TV & Merchandising AG holds in SLEC - the company which controls the commercial rights to Formula One - subject to that condition.
Mehler said he did not know when the first auction would take place.
A Kirch spokesman said: "A way was found which guarantees the transparent allocation of the rights which can be examined by the cartel authorities at any time."
Kirch deputy chief Dieter Hahn welcomed the decision.
"(The decision by the watchdog) has created a secure basis for the continuing talks on the future of Formula One racing according to the interests of all parties involved," he said.
An industry source said earlier this month that Kirch has joined EM.TV in talks with the Formula One carmakers to end a deadlock over the future of the sport.
The auto manufacturers have threatened to set up their own motor racing circuit if Kirch switches broadcasts to pay TV. Kirch has pledged to keep the races on free television.
The Bundeskartellamt said in a statement it had also cleared Kirch's exercise of an option to buy another 25 percent stake in SLEC.
After the option, Kirch, which rescued debt-laden EM.TV in February, and EM.TV jointly own 75 percent of SLEC, while racing boss Bernie Ecclestone has the remaining 25 percent.
Mehler said the watchdog and Kirch had agreed the media giant would bring the German F1 broadcasting rights into a separate company in order to speed up regulatory clearance for Kirch's purchases of the SLEC stakes.
"This was agreed in order to rapidly make the decision on the purchases. This solution reflected the wish of both parties," he said.
The Kirch spokesman said the outcome was the result of tough negotiations between the company and the Bundeskartellamt.
The German watchdog added that the purchase by Kirch of 16.74 percent in EM.TV and 25 percent of the voting rights in the troubled German media company was still being examined.
"It could certainly take some months before we reach a decision on this," Mehler said.