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The genius of Leo Kirch.

Cable networks look like a prime investment to Leo Kirch, the 66 year-old uncrowned konig of German television. He has recently spent some DM 150 million ($100 million) acquiring a 24.5 per cent interest in the Tele5 private cable channel and, together with partner Silvio Berlusconi, plans to turn it into a sports channel with new call letters.

According to various sources, Kirch and Berlusconi - partners in several other ventures - are now looking for a third party investment in Tele5, which headquarters in Munich, where Kirch has his power base (nicknamed Fort Knox). Word is that partner might be Otto Beisheim in Switzerland. Two years ago, Beisheim acquired a large part of Kirch's film library that he then resolved to SAT1 and Pro7 for a profitable total of DM 1,6 billion ($1 billion).

Kirch didn't buy his Tele5 shares directly. Its part-owner, Herbert Kloiber, sold his 26 per cent share in the channel to the Springer Verlag in Hamburg. Springer then passed 24.5 per cent of that holding to Kirch. Earlier RTL, which had a 24 per cent interest in Tele5, sold it to Springer for $80 million.

Springer and Kirch, in the past, have fought bitter battles, particularly over control of the Sat-1 channel, but the two also have joint interests, such as the ISPR firm, which obtains the rights to sports events. Today, Kirch owns 30 per cent of Springer.

It was via ISPR that SAT-1 obtained (for a reported $537 million) the rights to the German soccer league until 1997 (and then re-sold them to ARD). ISPR is negotiating for other international sporting events which could end up on the new Tele5.

Before Kirch got into the act, Tele5 - founded in 1985 - wasn't doing well, but it was getting better results than Pro7, Kirch's other cable network managed by his son Thomas, which, in turn, controls 45 per cent of the newest cable channel Kabelkanal.

Some TV executives in Germany question the reason for changing Tele5 instead of acting upon Pro7, which could have used a boost.

Plus, it is wondered why Berlusconi would agree to turn Tele5 into a sports channel when in Germany there are already two of such TV services: Eurosport and Sportkanal.

Because of federal limits on TV channels ownership, Kirch people are careful in presenting various channels as partnerships. Kirch also owns 24 per cent of Telepiu, the Italian pay-TV service spurred by Berlusconi. In Italy, Berlusconi is also battling with multiple TV ownership limits. It is also reported that, so far, Tele5 has lost $320 million and that its program concept changed several times.

Leo Kirch's Kirch Gruppe generates an estimated $1.5 billion in revenues per year.
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Publication:Video Age International
Date:Aug 1, 1992
Words:450
Previous Article:Video Age award for best TV in Germany to ZDF.
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