Anti Trust concerns of Federal Anti Trust Office („Bundeskartellamt") are unjustified / Raise of CLT-UFA share in Premiere without effect on the competitors / Rolf Schmidt-Holtz petitions extension in high potential digital TV market within legally secure framework.

CLT-UFA Luxembourg, September 8, 1998 ,

CLT-UFA rejects recent concerns expressed by the Federal Anti Trust Office in a letter against the increase of the CLT-UFA share in Premiere from 37.5 to 50 per cent as unjustified. The arguments developped by the Federal Anti Trust Authority were no objectif justification and are unsustainable upon factual and legal grounds. Prohibiting the increase of CLT-UFA's share in Premiere would primarily and above all hurt the interests of the viewers and endanger the further development of Germany as a media port.

Rolf Schmidt-Holtz, chairman of the board of directors of CLT-UFA said: „Premiere is in the market for more than seven years - which has left time enough for competitors to establish own Pay-TV offers. It cannot be that the lay-out and development within a secure legal framework of the high potential Pay-TV market in Germany would be hampered on behalf of the Federal Anti Trust Authority only because other players did not have sufficient guts to invest like we did into that new market."

The prohibition of the share increase would rather have to be considered as a voluntaristic arbitrary act of government which would further delay the breakthrough of Premiere Digital. Today CLT-UFA controls on the fully diluted bases (through intermediary companies) a 50 per cent share in Premiere. CLT-UFA's pending application to the Bundeskartellamt concerns the 25 per cent share of Canal Plus in UFA OHG in which CLT-UFA has a 75 per cent share. What is at stake thus is CLT-UFA's increase in UFA OHG from 75 to 100 per cent.

As CLT-UFA intends on a free diluted bases to increase its share in Premiere by 12.5 per cent only, this transaction cannot be compared to the merger control procedure initiated earlier this year and which was turned down in 1998 by the European Commission.

Furthermore CLT-UFA points out that the increase of its share in Premiere to 50 per cent would have no influence whatsoever on the television market: such a transaction would neither disadvantage any competitors nor would it increase the degree of concentration in the German TV market. On the other hand, an increase of the CLT-UFA's take is imperative for reasons of planning and investment security.

The Federal Anti Trust Authority estimates that the increase of the share held through intermediary companies by CLT-UFA would be arguable on the Anti Trust considerations if in parallel Kirchgroup would increase its 25 per cent stake in Premiere to 50 per cent. However no reference is made in the CLT-UFA application to the Federal Anti Trust Authorities to any changes in the current share ownership of Kirchgroup in Premiere. Thus the Federal Anti Trust Authority answers unasked questions and the CLT-UFA application remains untreated - a most certainly unique feature in Anti Trust law practice.

The CLT-UFA finally rejects as absurd suspicions of the Federal Anti Trust Authority that through the desired increase of participations in Premiere both CLT-UFA and Kirchgroup would end up cooperating also in the Free TV sector. Any one person with slight sophistication about the media sector knows CLT-UFA and Kirch group fearcely compete in domains such Free TV, film and sports rights' acquisition as well as film productions.

The CLT-UFA strongly believes that it will be possible to convince the Federal Anti Trust Authority with factual arguments. The company however today reserves the possibility to start legal action against a negative decision of the Federal Anti Trust Authority.

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