Two brothers who founded and ran EM.TV, briefly one of Germany's most fashionable media companies, have denied charges of falsification of accounts.

Thomas Haffa, who stepped down as chief executive last year, and his brother Florian, the former finance chief, are standing trial in Munich, accused of manipulating the company's share price.

The EM.TV trial is the focus of enormous attention in Germany, where it is seen as the comeuppance for the former stars of the Neuer Markt, the high-growth stock market which is to be closed after the tech sector's collapse.

EM.TV garnered enormous publicity with a series of splashy deals such as the purchase of the Jim Henson Company, owner of the Muppets.

But it built up debt in the process, plunged into a $1.4bn (�895m) loss in 2000, and saw its share price fall from 110 euros in February 2000 to less than 1 euro today.

High hopes

The publicity froth that surrounded the company during the late 1990s is now at the centre of the current trial.

The Haffas are the men behind the Muppets

Munich prosecutors allege that the Haffa brothers painted too rosy a picture of the firm's finances in interviews and speeches in late 2000, and reiterated earnings targets that they knew were out of reach.

At the height of the firm's success, the Haffa brothers said they were on their way to creating something to rival the US Disney corporation.

In mid-November 2000, Thomas Haffa said the firm was on course to make more than $300m that year, a figure he corrected down to less than $25m two weeks later.

Impossible prediction

In court on Monday, both brothers denied any wrongdoing.

Thomas Haffa argued that the violent ups and downs of the media licensing business made any sort of long-term prediction highly risky.

"With one single big contract we could still have reached the earnings target," he said.

"It was never my intention to mislead my shareholders."

Anyone's guess

Few are confident in predicting an outcome to the trial, since this is the first such case in German corporate history.

But it may not be the last - court cases could result from the recent disintegration of the much larger Kirch media empire, also based in Munich, and shareholders are furious about massive price falls at many Neuer Markt firms.

If convicted, the brothers could face up to three years in prison.

The trial is expected to last until at least January.