Thomas Haffa, the founder and head of troubled German media group EM.TV, has resigned from the company, sending the share price soaring.

Werner Klatten, head of the online edition of the magazine Der Spiegel, will take over as chief executive and buy 25.1% of EM.TV's shares.

Mr Haffa's reign saw dramatic moves such as the purchase of Jim Henson's Muppets and the takeover of Formula One racing which led to losses of 1.43bn euros ($1.26bn; �879m) last year.

The former German stock market darling has since seen its shares plummet from a record high of 120 euros to less than two euros.

EM.TV's bail-out deal with Germany's Kirch Group media conglomerate for a 16.7% of its shares also looks to be in trouble and may founder because of an investigation by the German competition authorities.

Shares in EM.TV rose 27% to 2.90 euros on Germany's Neuer Markt after the group named a new chief executive.

Haffa's fall

Thomas Haffa founded the company in 1989 and EM.TV had until recently been a star of the German stock exchange.

But the share price fall frustrated shareholders, who were expected to make their displeasure known at an upcoming shareholders' meeting next week.

The losses have forced EM.TV to say it would sell the Muppets, but no deal has yet been made.

Kirch bail-out

Meanwhile German media group Kirch may cancel its planned purchase of a stake in EM.TV because of concerns by the German Cartel Office.

The main issue was that the media group Tele Muenchen has rejected all the parties interested in taking the 45% stake in the company now held by EM.TV.

The German Cartel Office has ruled that EM.TV would have to divest its Tele Muenchen stake if Kirch took a stake in EM.TV.

If Kirch quit the deal it would be a serious blow the company's ambition to take full control of the broadcasting rights for Formula One.