- Title: GERMANY/UK: MEDIA GROUP KIRCH MOVES CLOSER TO INSOLVENCY AS RESCUE TALKS FAIL.
- Date: 5th April 2002
- Summary: (U4)UNTERFOEHRING, GERMANY (FILE - FEBRUARY 12, 2002) (REUTERS - ACCESS ALL) 1. EXTERIORS OF KIRCH MEDIA HEADQUARTERS IN UNTERFOEHRING OUTSIDE MUNICH 2. SIGNS READING KIRCH MEDIA 3. LOGOS OF TELEVISION CHANNELS BELONGING TO KIRCH MEDIA 4. TV STUDIO INTERIOR (U4)BERLIN, GERMANY (FILE - NOVEMBER 15, 2001) (REUTERS - ACCESS ALL) 5. LEO KIRCH, MEDIA MOGUL, APPEARING IN FRONT OF PARLIAMENTARY INVESTIGATION COMMITTEE AS PART OF THE SLUSH FUND SCANDAL INVOLVING FORMER GERMAN CHANCELLOR HELMUT KOHL 6. PHOTOGRAPHERS TAKING PICTURES 7. KIRCH POSING FOR CAMERAS (U4)LONDON, UNITED KINGDOM (FILE) (REUTERS - ACCESS ALL) 8. RUPERT MURDOCH SPEAKING AT NEWS CONFERENCE 9. JOURNALISTS TAKING NOTES (U4)BERLIN, GERMANY (FILE - SEPTEMBER 26, 2001) (REUTERS - ACCESS ALL) 10. SILVIO BERLUSCONI, ITALIAN PRIME MINISTER AND IN CONTROL OF MEDIASET, RECEIVED WITH MILITARY HONOURS BY GERMAN CHANCELLOR GERHARD SCHROEDER 11. BERLUSCONI AND RUSSIAN PRESIDENT VLADIMIR PUTIN AT WORKING BREAKFAST (U4)FRANKFURT, GERMANY (FILE) (REUTERS - ACCESS ALL) 12. WIDE OF FRANKFURT SKYLINE 13. EXTERIORS COMMERZBANK (U4)MUNICH, GERMANY (FILE - MARCH 27, 2002) (REUTERS - ACCESS ALL) 14. EXTERIORS OF BAYERISCHE LANDESBANK, HALF-OWNED BY THE STATE OF BAVARIA, WHICH GAVE SOFT LOANS TO KIRCH GROUP (U4)DORTMUND, GERMANY ((FILE - OCTOBER 20, 2000) (REUTERS - ACCESS ALL) 15. BORUSSIA DORTMUND FOOTBALLERS DURING PRACTICE (U4)GELSENKIRCHEN, GERMANY (FILE - MAY 24, 2001) (REUTERS - ACCESS ALL) 16. SCHALKE 04 FOOTBALLERS DURING PRACTICE (U4)MUNICH, GERMANY (FILE - AUGUST 22, 2001) (REUTERS - ACCESS ALL) 17. BAYERN MUNICH FOOTBALLERS DURING PRACTICE Initials Script is copyright Reuters Limited. All rights reserved
- Embargoed: 20th April 2002 13:00
- Keywords:
- Location: UNTERFOEHRING, BERLIN, FRANKFURT, DORTMUND, GELSENKIRCHEN, MUNICH, GERMANY AND LONDON, UNITED KINGDOM
- City:
- Country: United Kingdom
- Reuters ID: LVA9438G2KNFC49VAT0L7N2OTM3U
- Story Text: German media group Kirch inched closer to an insolvency
filing as talks in Munich and Los Angeles between creditors
and investors failed to agree a rescue plan for its core
business.
According to banking sources, a last-minute meeting in
Munich due later on Friday (April 5) between minority
KirchMedia shareholders, including Rupert Murdochs News Corp
and Mediaset, the broadcaster controlled by the family of
Italian Prime Minister Silvio Berlusconi, was unlikely to
help.
However, it was not clear whether media mogul Leo Kirch,
who spent almost 50 years building an empire that controls
Germany's biggest commercial broadcaster ProSiebenSat.1 and
extensive movie and sports rights, would seek insolvency for
KirchMedia on Friday or hold off until early next week.
Insolvency of KirchMedia, the groups core television and
rights business, would mark the latest chapter in a
long-running corporate drama which could have far-reaching
political and economic consequences.
Kirch is suffering from a cash crisis as it staggers under
a 6.5 billion euro debt pile. Rescue efforts so far have
centred on a plan to inject 150 million euros in emergency
bridge financing, followed by an 800 million euro capital
injection that would give the minority investors control of
KirchMedia.
Its problems have become a political hot potato, as
Germany limbers up for national elections. Any solution to the
company's problems could open the door for either Murdoch or
Berlusconi, who leads a centre-right government in Italy, to
capture an important slice of the media market in Europe's
biggest economy.
The Kirch group employs 9,000-11,000 people, and an
insolvency could cost 3,000-4,000 jobs, according to union
officials.
A Kirch failure could add to Germanys growing jobless
tally, further squeeze its banks slim profits and would dent
Edmund Stoibers image as the Bavarian premier challenges
Chancellor Gerhard Schroeder in a general election in
September.
As major pay television operators risk collapse in Germany
and Britain, the whistle has blown on a golden era for
European soccer clubs who are having to tighten their belts or
risk going under themselves.
Kirch controls the broadcasting rights to Formula One
motor racing and owns TV rights to World Cup and German
soccer.
The German government has said it is considering setting
up a 200 million euro financial guarantee fund to help leading
soccer clubs that may be threatened by a Kirch collapse.
After a decade in which footballers' wages rocketed as
cash poured into the sport from sponsorship deals and the
lucrative sale of television rights, clubs across Europe are
waking up to an uncertain future as pay-TV firms try to
renegotiate terms.
The prospect of the demise of Britain's ITV Digital and
German media group Kirch threatens the survival of many small
clubs as well as the profitability of some big name sides and
is fuelling a debate about the need to cap players' salaries.
The advent of pay television and fierce competition
between the new providers helped fuel spiralling soccer rights
costs throughout the 1990s, in turn driving ever-increasing
salaries for players as well as ambitious plans for expensive
new stadia.
But pay-TV failed to win as many subscribers as expected
amid saturation coverage of soccer. And, as advertising
revenue slumped during the global downturn, firms that
borrowed heavily to pay for those rights have sunk deeper into
debt.
Managers of several large clubs have admitted the 1.5
billion euro ($1.3 billion) deal might have to be
renegotiated.
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