Kirch's pay-TV business to restructure

The German pay-TV business Premiere, one of the most troubled parts of the highly indebted Kirch media empire, yesterday announced a restructuring plan that it claimed would see the division into profit by 2004.

The TV company, in which BSkyB has a 22 per cent stake, will cut up to 30 per cent of its 2,400-strong workforce this year.

Georg Kofler, the new chief executive of Premiere, said his restructuring plan could save €500m (£310m) a year, and he predicted that the business could be ready for an initial public offering in the first quarter of 2004. The savings, he said, would enable Premiere to turn a profit with 3.1 million subscribers, down from its earlier target of 4 million. There will also be new cheaper subscription deals on offer, to drive customer growth.

However, the business, which is fast running out of cash, admitted that it would need an injection of fresh funds this year. Simon Wallis, an analyst at West LB, said: "It remains to be seen whether Kofler will have enough time to implement his plan."

At the end of last year Premiere had only 2.4 million subscribers and it lost €989m during 2001, on sales of €813m. The business is tied into cripplingly expensive content deals that are not viable with the current subscriber levels. "We're confident of reaching a fundamental turning point for Premiere in the fall of this year," Mr Kofler said.

Separately, the formal death knell was sounded for a deal planned for a different Kirch business – the KirchMedia rights division, which was supposed to merge this year with broadcaster ProSiebenSat.1. That merger was delayed recently. Yesterday ProSieben said the plan was off altogether.