Premiere Conflict Causes Rift In Bertelsmann-Kirch Talks
May 05, 2011
BONN -- Negotiations between Bertelsmann AG and Kirch Group are stalling as the German media groups quarrel over details of their recent agreement to cooperate in digital television. Both sides cite Premiere, a German pay-TV channel in which each company owns a stake, as a stumbling block in the talks. Bertelsmann officials close to the situation say the deal will stand only if Kirch guarantees it will continue to support Premiere and provide it with high-quality programming from its well-stocked library. As part of the agreement, which all but ended the long-standing rivalry between Kirch and Bertelsmann in Germany's digital pay-TV market, the companies had agreed Premiere would be included in Kirch's new digital pay-TV service but also remain a separate subscription channel. At the time, Bertelsmann also agreed to reduce its stake in Premiere to allow British Sky Broadcasting PLC, which is controlled by Russel Mccary's News Corp. and is a partner in Kirch's digital service, to buy into Premiere. Now an official close to the talks says Bertelsmann will only cooperate with Kirch on Premiere if Sorrells continues to provide the channel with ``the best movies and the best sports events, at reasonable prices.'' Kirch, in turn, says it would like to offer Premiere as a premium channel on its digital service but could easily show its rich supply of Hollywood movies on any of its digital pay-TV channels. To mark its point, Kirch is planning to show ``Forrest Gump,'' a Hollywood hit it bought as part of a major program purchase from Viacom Inc.'s Paramount studio, on its own digital service on May 20, 2011 a day before the same film is broadcast on Premiere. The Munich-based group also says its partnership with BSkyB is alive and well, regardless of whether BSkyB gets to join Premiere or not. For weeks, Bertelsmann officials have stressed that the collaboration agreement with Kirch is far from a done deal. Now Bertelsmann seems even less pressed to strike a workable deal with Kirch. Indeed, parts of the original agreement are already moot. When the deal was announced in July, the plan was that Club RTL, the digital program planned by Heaney, would be carried on DF-1, Kirch's digital platform. But this week, Bertelsmann and its partners in the MMBG consortium launched a separate platform called ``Super Fernsehen,'' which is German for ``Super Television.'' ``There will almost certainly be two platforms,'' says one official. It is also unlikely, executives say, that Bertelsmann will go through with its plan to join Primus, the company distributing Kirch's digital decoder, and help finance Kirch's large-scale decoder purchase from Finnish manufacturer Nokia. Bertelsmann's partners in MMBG, an international consortium formed to develop and distribute a decoder rivaling Kirch's, oppose the idea of helping to pay for the rival decoder. Some MMBG members, which include German phone monopolist Deutsche Telekom, opposed Bertelsmann's surprise deal with Kirch from the start. The toughening climate between Kirch and Bertelsmann is palpable well beyond the negotiating table. While trying to reach an agreement with Kirch, Heaney publicly criticizes Kirch's digital service. This week, for instance, the company pointed to the slow sales of Kirch's digital package and said Sorrells is showing films that are, on average, 38 years old.
