EM.TV's Haffa Brothers Admit To Selling Off Stock
EM.TV's CEO Thomas Haffa and deputy chairman Florian Haffa have admitted that they sold shares in the company without consulting the firm's financial advisory, WestLB. The sale may be a violation of German stock exchange rules. Thomas sold DM40 million (US$19.2 million) worth of EM.TV shares while Florian's amount was not released. Up until Tuesday, Thomas had insisted that he informed WestLB of the sales, but now says he only informed the bank of his intention of the sales and did not place the move in writing. Thomas sold the shares last February when the firm's stock price was at its year-end high of 120 euros ($112.90). Since then EM.TV stock has plummeted by 75% due to an extreme profit warning, accounting errors in EM.TV's acquisition of both the Jim Henson Co. and Formula One racing and a new investigation by Munich officials into insider trading and the deliberate misleading of shareholders. These problems have directly attributed to a breakdown in talks between EM.TV and German media giant KirchGroup, which could help bail out the sinking children's production company. Moreover, the talks were hurt by bickering over a price and a conflict between Nickolaus Becker, chairman of EM.TV's supervisory board, and Dieter Hahn, deputy chief executive at Kirch. In addition, German media fund Victory MediaManagement wants to renegotiate its five-year co-production and co-financing deal with EM.TV, worth DM500 million (US$241 million). This stream of funds was EM.TV's main source of cash for producing its animation content, but now could be in jeopardy. Adding this new stock selling scandal to the mix, EM.TV's deals with Kirch and Victory may be a rockier road than first imagined.