Springer buys German TV group

German publisher Axel Springer is taking full control of broadcaster ProSiebenSat.1 Media in a €2.5 billion-euro deal to create Germany's second-biggest media group.

With the deal, Springer Chief Executive Mathias Doepfner fulfils a long-held dream of the company's late founder Axel Springer to marry the content and advertising power of its conservative daily newspaper Bild with television.

"ProSiebenSat.1 is an investment that will pay off," Doepfner said in a statement yesterday.

"We are investing in a business that is profitable even in difficult times.

"We are creating a structure to open up the digital business of the future."

The deal will give Springer, whose domestic newspaper sales are sliding, greater access to the TV market - but will keep it tied to the advertising doldrums in Germany, Europe's least growing economy, and drag it deep into debt.

The deal needs cartel and media regulator approval but there are few rules on cross-ownership which could bring it down.

Springer's and ProSieben's combined sales of €4.2 billion in 2004 will be second in Germany only to the world's fourth-biggest media group, Bertelsmann, which had 30 percent of its sales, or €5.1 billion, in its home market.

US media billionaire Haim Saban, who made his fortune with cartoon characters such as The Power Rangers, and the group of private equity investors in his consortium will sell the stake they bought two years ago at three times the purchase price.

Springer - which already owns 12 percent of ProSieben - said it will buy all vote-carrying common shares and all preferred shares from Saban's group, known as P7S1 Holding.

It will own all common and 25 percent of the preferred shares.

It will pay €23.37 per common and €14.10 per preferred share in cash. On top of that, P7S1 will also receive a 2.4-per cent stake in Springer.

Springer will then make a tender offer to buy ProSieben's outstanding preferred shares - the listed stock, which has no voting power - as required by German takeover law.

It will offer ProSieben preferred shareholders the three-month, volume-weighted average share price - the minimum amount required under German law.

According to preliminary calculations, this amounts to €14.10 per share, it said.

ProSieben shares rose more than 3 percent in early trade as traders hoped they could still get a better deal, but by 11.10am had fallen back to trade up 1 percent at €14.94.