Frankfurt, Germany -- British Sky Broadcasting Group plc
has set two conditions on its agreement to buy into Kirch PayTV that could see it unload
the investment or take over management of pay TV platform Premiere World.
The platform, which currently has 2.1 million subscribers,
expects that number to grow to 2.9 million by the end of next year and to 4 million over
the next two.
If Premiere World doesn't come within at least 20 percent
of the latter target, BSkyB has the right to sell its stake back to Kirch, executives
said. If Kirch is unwilling or unable to reacquire the stake, BSkyB will be able to assume
management control of the venture.
"Then BSkyB can prove they're able to do a better job
than we did," Kirch vice chairman Dieter Hahn said, although he added that such a
scenario is unlikely. He called BSkyB's agreement "a long-term purchase," but he
said Kirch doesn't intend to sell additional stakes to the British direct-to-home
platform, which is 40 percent-owned by News Corp.
As expected, BSkyB said last week that it agreed to acquire
24 percent of Kirch PayTV -- formally known as Kirch PayTV GmbH & Co. KGaA -- for 2.9
billion deutsche marks ($1.5 billion) in cash and BSkyB shares, giving News Corp. chairman
Rupert Murdoch a long-awaited foothold in Germany.
Premiere World is expected to be cash-flow-positive in
2002, although it's forecasted to rack up additional losses of DM2.1 billion ($1.1
billion) by then.
The platform -- the result of the merger of Kirch's DF1 and
the Premiere pay TV channel it took control of earlier this year -- added 110,000 new
subscribers in October. It added another 94,000 last month, while 56,000 analog
subscribers switched to the digital service.
Of Premiere World's 2.1 million subscribers, 1.16 million
receive the digital service.