Tarak Ben Ammar's Biggest Production
It was over a quiet dinner at a plush Munich restaurant in February, 1998, when Leo Kirch let out the big news: The Bavarian media tycoon would finally consider allowing outsiders to invest in the broadcasting empire he had built. Kirch made the surprise admission to his dining partner that evening, his longtime friend, Franco-Tunisian film producer Tarak Ben Ammar. Just three years earlier, Ben Ammar had structured a $1 billion deal in which Silvio Berlusconi, the Italian media-king-turned-politician, had sold off 25% of his empire to outside investors including Kirch. "Tarak, I know what you did for Silvio," said Kirch. "Let's do the same thing here."
In the art-filled sitting room of his Paris villa, Ben Ammar reflects on that fateful evening. Soon after that dinner, the two friends hatched an ambitious plan that would ultimately see powerful investors such as Berlusconi, Rupert Murdoch, and Saudi Prince Alwaleed--all close associates of Ben Ammar--fork over more than $3 billion for minority stakes in Kirch companies. It seemed ideal: Kirch would get new capital, and Ben Ammar's pals would get a piece of the lucrative German market and a chance to reap big gains when Kirch went public, as did Berlusconi's Mediaset in 1996. The plan was code-named Project Traviata, a sly reference to the Franco Zeffirelli film of the tragic Verdi opera, a 1983 hit produced by Ben Ammar. "Maybe we shouldn't have named it that, since the heroine dies in the end," says Ben Ammar.
Indeed. The Apr. 8 insolvency of KirchMedia marks the definitive end of Leo Kirch's remarkable half-century career. It would also seem to be a spectacular setback for Ben Ammar, whose double career as a film tycoon and an invaluable behind-the-scenes dealmaker has made him one of the most influential media players in Europe. But unlike the tubercular Violetta of La Traviata, the Kirch media empire may well be reborn in the next few weeks, albeit without Kirch himself.
Creditors and shareholders are trying to hash out a multibillion-dollar plan to refloat the group. If it's successful, much of the credit should go to Ben Ammar, who seems determined to recover his reputation as a savvy dealmaker. "He's really the hero, single-handedly keeping the conversations going between Murdoch, Berlusconi, and Kirch over the last few weeks," says Ruggero Magnoni, the vice-chairman of Lehman Brothers Europe, an investor as well as creditor of KirchMedia.
Restructuring Kirch will require truly heroic measures from the 52-year-old Ben Ammar. Investors who have seen their equity all but vanish will be asked to participate in a $700 million recapitalization of KirchMedia, which controls the profitable ProSiebenSat.1 commercial network. Under a plan now under negotiation, German creditor banks and German groups would control a majority of the new KirchMedia. The separate Premiere World pay-TV service is losing almost $2 million a day, according to insiders, and will require up to $2 billion in recapitalization. A News Corp. spokesman says neither News Corp. nor Murdoch's British Sky Broadcasting Group PLC have "any intention of putting one more cent into Premiere."
If anyone can get investors to come up with more cash, it is Ben Ammar. Although he's produced close to 50 films with directors such as Roman Polanski and Robert Redford, Ben Ammar has really excelled as a door-opener and adviser to four of the key media players operating in Europe. Thanks to him, Berlusconi, Murdoch, Kirch, and Alwaleed are closely linked in numerous alliances and shareholdings. "These are individuals who control or own their own companies, so if tomorrow you want to buy something, all you need is basically four phone calls," says Ben Ammar. He says he's no one's employee and doesn't act as an investment bank. But he does get fat fees, usually 1.5% of a deal's value.
Ben Ammar's first big media deal was with Berlusconi, with whom he had been producing TV miniseries since 1983. The Italian tycoon's controversial 1993 decision to enter national politics meant he had to quickly turn a one-man family company into a professionally run corporation and bring in outside investors. He turned to Ben Ammar, who is at home in Hollywood and fluent in English, French, Italian, and Arabic. Good choice. Within months, the Tunisian had lined up Alwaleed and Kirch among a group of core investors who pumped $1 billion into Mediaset.
Alwaleed, in particular, began to use Ben Ammar as his eyes and ears in the media world. When the Saudi prince picked up $400 million in News Corp. shares in 1997, that brought Murdoch into the informal grouping. The following year, Alwaleed put an additional $250 million into News Corp. and was trading ideas with Murdoch about possible joint operations. Early in 1999, Ben Ammar had engineered a $1.3 billion investment in KirchMedia by Alwaleed, Berlusconi, and others, and Murdoch picked up a $1.4 billion stake in Premiere. The News Corp. CEO would also put $250 million in KirchMedia, investing alongside Berlusconi and Alwaleed. All wanted to get into the German television market, Europe's largest.
The concept may have been sound, but Kirch's management, particularly of pay TV, was dreadful. Kirch had used bank debt to buy expensive properties, such as broadcast rights for Formula One auto races and World Cup football, at the top of the market. And the whole empire was caught up in the crumbling of media and telecommunications valuations last year. Ben Ammar also now recognizes that Kirch, whom he still calls "my dear friend Leo," was burying bad deals within the group's complex corporate structure: "We're still discovering skeletons," he says.
Although Ben Ammar can be engagingly persuasive, he can't always get a deal done. In January, when Kirch's pay-TV operations were already in desperate shape, Ben Ammar helped structure a deal by which the German would give co-control to Murdoch. After months of secret negotiations, Kirch flew to Britain to tie up the deal with Murdoch. Over lunch at BSkyB headquarters, Kirch told his astounded hosts that he had changed his mind and wanted to continue running things himself. Within weeks, the empire Kirch had built from scratch started unraveling. "He had created the business, and he just didn't want to give it up," says Ben Ammar.
Ben Ammar is still making films: His latest production, a $35 million Brian De Palma film called Femme Fatale and starring Antonio Banderas, premiers in the U.S. in November. But he says that working alongside dealmakers such as Murdoch, Berlusconi, Alwaleed, and Kirch "is about the ultimate in excitement." Kirch, for one, is now out of that dealmaking group for good. But for Ben Ammar, the game is still plenty hot.
By John Rossant in Paris