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Business

Viva Forever?

The success of German cable music video channel Viva, one of the first brands for a post-reunification generation, has come as a great defeat for MTV. Now, its American competitor wants to buy it.

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Are Dieter Gorny's (left) days at the helm of video music channel Viva numbered?

When Dieter Gorny set out to take on MTV in Germany, it looked a lot like Captain Ahab going after Moby Dick.

But for a long time, it appeared Gorny might prove his critics wrong. In the nearly 10 years since it was introduced on German cable in 1993, Viva has grown from 20 to 1,000 employees (if you count its subsidiaries) and generates 60 million euros in sales each year. This year, the company expects revenues to clear the 125 million euro hurdle.

Building an empire, one channel at a time

Close to 5.2 million viewers roughly between the ages of Aaron Carter and Britney Spears - two artists played by Viva - tune into the music video channel, which is operated from Cologne's chic Media Park. Comparatively, MTV has about 3.7 million in the same critical age group according to recent ratings.

Lately, Viva's founders have been on a shopping spree, snatching up similar companies in Hungary, Poland, Switzerland and Austria. They have also expressed interest in expanding to the U.S.

Giving MTV a ride for its money

Even MTV executives concede to how powerful Viva has become in the German media. "Germany is probably our most hotly contested market worldwide," MTV International director Bill Roedy told the "Frankfurter Allgemeine Zeitung" in November.

But now, ironically, Dieter Gorny looks set to be eaten by the whale - either Moby Dick, if archrival and MTV-owning Viacom takes a bite, or an even bigger whale if media behemoth AOL Time Warner sinks its teeth into the German upstart.

The U.S.-based Viacom and AOL Time Warner are both fighting for control of Viva. AOL Time Warner already owns a 15.3 percent share of the company, including a 49 percent stake in the Viva Plus channel, a joint venture. It is seeking to expand if EMI and Vivendi Universal unload their respective 15 percent interests – a move both companies have signaled they will take.

A Viacom takeover could be problematic since it owns Viva's only serious German competitor, MTV.

Setting a date with fate

"The German phenomenon Viva has become a company whose future will no longer be decided here," co-founder Gorny, told the German-language edition of the "Financial Times" last week.

Gorny has long sought to depict Viva's competition with MTV as a David vs. Goliath battle – it is a fight that has also played out on Viva's airwaves.

Viva currently has a market value of some 65 million euro, and it has seen its stock rally by some 34 percent since late April.

Would Viacom Steamroll It?

Unsurprisingly, Viva co-founders Gorny and Halge Sasse have expressed a preference for AOL Time Warner as a potential owner. A skimming of assessments from financial analysts suggests why.

Bean counters and forecasters quoted in the German media believe that if Viacom takes over Viva, it will "steamroll" the enterprise, merging channels and possibly laying off some of the Cologne-based firm's close to 1,000 employees.

In the end, there may be little the publicly traded company can do to stop a hostile acquisition.

"We have to assume that there will soon be a clearly different stockholder structure," Gorny told the "Süddeutsche Zeitung" newspaper.

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