Curious Acquisition
January 9, 2008
News Corp, the global company run by Murdoch, announced this week that it had acquired the stake in Premiere for 287 million euros ($422.5 million). The result was an immediate rise in share prices for Germany's largest pay-TV operator.
It's the second time Murdoch has invested in Premiere. In 2002, Murdoch lost millions when the company belonging to the founder of the pay-TV station, German media mogul Leo Kirch, went bankrupt.
Experts think the decision to re-invest reflects Murdoch's abiding confidence in the pay-TV format -- even in Germany, where it has yet to truly take off.
"Pay TV is one of the central focuses of Murdoch's News Corp," media business expert Adam Bird told the online version of Germany's Spiegel magazine.
"With BSkyB, he's one of the most successful pay-TV operators in the world, and he showed with Sky Italia that he can turn around difficult situations," Bird said.
Helmut Thoma, the former head of Germany's RTL TV station told the on-line version of Stern magazine that Murdoch might be giving the German market a second chance.
"Perhaps he just wanted to stick his toe in the water again to see if something could be developed," he said.
Close relationship with the Bundesliga
Other experts said that the deal makes sense because it will allow Murdoch to sell his other wares.
"By getting into Premiere, Murdoch is acquiring another platform to market the media products produced by News Corp," media analyst Larry Witt told the Financial Times Deutschland newspaper.
Premiere's flagship product is Bundesliga soccer. Last season, the station lost a bidding war to rivals Arena for the rights to broadcast league matches live.
But Arena proved unable to master the logistics and were forced, in essence, to turn responsibility for telecasting the games back over to Premiere, cementing the relationship between the station and Germany's most popular sport.
"The past has shown that [live football] doesn't work without Premiere," media analyst Friedrich Schellmoser told Spiegel online.
Uphill battle
But despite the positives, experts feel that Murdoch will struggle to raise the profile of Premiere in Germany. Only 4.2 million Germans have Premiere, and a far lower percentage of the German population uses pay-TV services than in other countries.
"They have different television structures," Helmut Thoma told Stern online. "In Britain, there were only four or five channels before Pay TV came along. In that situation, the broad offerings of Sky were able to be successful. But in Germany there's a much greater variety of free terrestrial stations so that there not that much left over for Pay TV."
Premier has rarely made money in the past, and many years it lost millions. Murdoch may, however, have been encouraged by the fact that the station was slightly in the black for the third quarter of 2007.