Murdoch eyes pounds 10bn German bid

Deutsche Telekom's network would give mogul an outlet for football and other programmes
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The Independent Online
RUPERT MURDOCH is thinking of buying Deutsche Telekom's cable television network in Germany in the face of stiff competition from more than a dozen rivals. A deal would cost News Corp or BSkyB up to pounds 10bn, but would help the controversial media mogul realise his ambition to be the dominant force in European pay television.

"We have sent a letter indicating interest, and we're investigating the opportunity as we investigate all opportunities," a News International spokeswoman said on Friday.

The network, which supplies more than half the German populace with some 30 channels, was put up for sale by the partially privatised telephone company this spring under pressure from regulators in Bonn.

The deadline for bids for nine geographical units passed on 20 August. At least five companies submitted offers. Mr Murdoch did not. But analysts say he is still in the game.

On 27 July, he met with Ron Sommer, chairman of Deutsche Telekom, in Bonn. Prior to that, he held talks in Munich with the Bayerische Hypo- Vereinsbank, part of a consortium trying to acquire the Bavarian area of the Deutsche Telekom network.

Deutsche Telekom said it is now reviewing the bids. "We shall enter into negotiations with the bidders, but there is no timetable," a spokesman said. "We expect to have sold one or another [of the nine units] by the end of the year."

Last autumn, Mr Murdoch bought two-thirds of German television station tm3, which has a mostly female audience, and then surprised analysts by winning the rights to broadcast European Champions League football in Germany for four years. News Corp also owns 49.9 per cent of Vox, another broadcast outlet in Germany with a 3 per cent market share.

By buying Deutsche Telekom cable, he would fulfil his ambition to be a market leader in Germany, the world's second most prosperous media market.

In recent years, partnerships with Bertelsmann, the German media group, and Leo Kirch, the German media baron, have been announced, only to founder shortly thereafter.

Profits from Deutsche Telekom's cable network have been unexciting. But competition for the network is still likely to be fierce as it could become one of the biggest interactive networks in the world. "It's arguably the biggest event ever in the European cable industry," said Roger Wilson, editor of Inside Cable, an online newsletter.

The German phone company wants to keep 25 per cent of each of the nine units in the network. But it needs the funds from the sale to finance its wide-ranging expansion plans. The company recently spent pounds 9bn buying One 2 One, Cable & Wireless's mobile phone unit.

Despite the constraints placed on the sale by Deutsche Telekom, there is no shortage of bidders. International cable firms such as UPC, MediaOne and NTL are thought to have bid, as are financial groups led by Deutsche Bank and GE Capital. Both Microsoft and Bertelsmann are believed to have expressed interest like Mr Murdoch. Bertelsmann, which has significant internet interests including a stake in AOL, found the conditions laid down by Deutsche Telekom too onerous.

Despite this competition, Mr Murdoch looks well placed. His interests do not compete with the voice telephone business of Deutsche Telekom. And the German company has said it wants buyers who will "add value" to its network.

Mr Murdoch's ambitions in Europe stem from his desire to maximise the outlets for his Fox film and television production units in the US. "No one in Europe has yet really merged infrastructure and content," said one analyst. "This is the moment Murdoch could do it."

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