Deutsche Entertainment AG (DEAG), a leading concert promoter in Germany, and
a majority shareholder in Stella Entertainment AG, Germany's largest producer of
musical theater, has sold its interest in the company after financial problems emerged
from Stella. DEAG's 2001 year-end financials will now have to be readjusted and
likely to turn its $7.7 million (euro 8.6 million) net profit into a
two-figure million-dollar loss, reports the Frankfurter Allgemeine Zeitung. On April
29, DEAG learned that Broadway
Musical Management (BMM) was filing for bankruptcy. BMM acts as the holding
company for Stella's six musical theaters in Hamburg, Berlin, Bochum and
The company expects to post a two-figure million dollar loss due to a substantial
drop in March ticket sales, which continued, into April.
DEAG will now concentrate on its core business
of concerts, tours, variety shows and the operation of game halls.
DEAG Chairman Peter Schwenkow said it had been too risky for DEAG to bail
Stella out by injecting a
mid-ranged two-figure million dollar sum, without additional financing from
the banks, the paper said. He also said it would likely have been far beyond
DEAG's financial means.
When questioned about his responsibility as head of Stella's supervisory board,
Schwenkow replied: "As supervisory board chairman, you can only be as good as
the information you get from the executive board." Subsequently, all four executive
board members resigned from their positions. Former
supervisory board member Hans-Martin Buhlmann has now become the sole
manager of Stella; Schwenkow's contract was extended for five years.
BMM will undergo restructuring, cost cuts and closings of non-profitable areas.