Kirch Group to Decide on Taking Stake in EM.TV

Kirch Group, Germany’s No. 2 media company, said it aims to complete talks within weeks about taking a stake in EM.TV & Merchandising, owner of Jim Henson Co., creator of the Muppets. The shares and bonds of EM.TV continued to slide amid reports the talks may break down.

Although Kirch and EM.TV signed an agreement in December under which Kirch would end up with 25% of the television-licensing company, reports in the Wall Street Journal and the Financial Times Deutschland have suggested the plan may yet fail.

Kirch is “optimistic that a decision will be made at the beginning of February,” Kirch spokesman Hartmut Schultz said. He and EM.TV spokesman Michael Birnbaum wouldn’t comment on reports about disagreements. EM.TV shares dropped as much as 9% on Monday.

Munich-based Kirch, which is controlled by German media tycoon Leo Kirch, said last month it would get the stake in EM.TV, which is based in Unterfoehring, Germany, for its share of a joint venture. It also plans to pay $550 million for part of EM.TV’s holdings in Formula One auto racing.

EM.TV shares have lost more than 90% since March amid missed forecasts, profit revisions and concerns that the company overpaid for purchases. Two executives, including former Chief Financial Officer Florian Haffa, have quit, and Chairman Nickolaus Becker may be next to resign, shareholders say.

“We would be very unhappy if Mr. Becker remained head of the supervisory board,” said Petra Kruell, spokeswoman for one of the shareholder groups suing EM.TV.

EM.TV is facing an investigation into insider trading by German regulators and at least eight shareholder suits alleging that Chief Executive Thomas Haffa, Florian’s brother, was too slow to tell investors about the company’s problems.

EM.TV shares slid along with those of other German film companies, such as Constantin Film and Intertainment. EM.TV is now worth about $653 million, compared with about $14.18 billion in March.