New Kirch Structure Takes Shape

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Frankfurt, Germany -- Germany's The Kirch Group said last
week that it will place its pay television assets under the roof of one holding company as
of Jan. 1.

The yet-unnamed company will oversee Kirch's digital
direct-to-home platform, DF1; its 25 percent stake in German pay TV channel Premiere; its
stake in Discovery Channel Germany (a 50-50 joint venture with Discovery Communications
Inc.); its stake in German pay TV channel KrimiTel; and its partial investment in Swiss
pay TV channel TeleClub.

It will be headed by Marcus Tellenbach, who, for the last
four years, has led German music-video channel Vox, which is owned by News Corp.,
Germany's Bertelsmann A.G. and Canal Plus of France.The new company is part of Kirch's
ongoing effort to restructure its holdings -- a task that it wants to complete by the end
of this year. But analysts have said that the task is too big to be accomplished by then.

"We are right on schedule," said Dieter Hahn,
Kirch's deputy chairman.

The restructuring will see Taurus Holding, a new Kirch
unit, atop a pyramid of Kirch subholdings that include different fields of the TV
industry.

Analysts pointed out the absence of one Kirch holding in
the new company: Betaresearch, the company's technology unit.

Betaresearch, which developed Kirch's conditional-access
technology, is, in a way, the gatekeeper to the company's digital world. By not including
it under the roof of the new company, Kirch is guaranteed control of Betaresearch if the
new holding is ever opened to outside investors.

There has long been speculation that News Corp. or Italian
media magnate Silvio Berlusconi would invest in Kirch. And while no investment has
occurred, those two, or another investor, could theoretically buy into one of the Kirch
subholdings.

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