- Title: GERMANY: KIRCH EMPLOYEES REELING AT INSOLVENCY.
- Date: 5th April 2002
- Summary: UNTERFOEHRING, GERMANY (APRIL 5, 2002) (REUTERS - ACCESS ALL) 1. EXTERIORS OF KIRCH MEDIA HEADQUARTERS IN UNTERFOEHRING OUTSIDE MUNICH 2. PRESS WAITING OUTSIDE OUTSIDE BUILDING 3. KIRCH EMPLOYEES WALKING AWAY FROM HEADQUARTERS 4. SATELLITE DISHES ON ROOF 5. WIDE SHOT OF KIRCH HEADQUARTERS Initials Script is copyright Reuters Limited. All rights reserved
- Embargoed: 20th April 2002 13:00
- Keywords:
- Location: UNTERFOEHRING, GERMANY
- Country: Germany
- Reuters ID: LVA5MA63ACVQUU07V3NWV7RVSKPC
- Story Text: The southern German city of Munich is reeling at the
prospect of local media giant Kirch Group applying for
insolvency
The southern German city of Munich is reeling at the
prospect of local media giant Kirch Group applying for
insolvency, tarnishing its image as a media capital and
leading to the loss of thousands of jobs.
Used to having stars like Bruce Willis and Arnold
Schwarzenegger breeze into town for film premieres, Munich is
adjusting to the fact that one of its mainstay industries,
alongside IT and insurance, is not immune to failure.
The demise of a key player could hurt the media industry
in the Munich area where it generates annual sales of around
20 billion euros and employs 130,000.
An economic downturn has already bit into the advertising
market, so that few listed German media companies are in the
black. Some like EM.TV & Merchandising are trying to
restructure to get on firm ground, others like Kinowelt have
filed for insolvency.
"The collapse of Kirch will hit the media market and the
city hard," said Gertraud Burkert, the deputy mayor of Munich.
"There are thousands of jobs tied up with the business, though
we hope a lot can be saved but we don't know by whom and how."
Munich has long prided itself on having the lowest
unemployment rate among the big cities in Germany.
Time seems to have run out for Kirch, with debts of 6.5
billion euros, which has spent weeks haggling with its
creditors and shareholders for an extension of its loans and
repayments.
An insolvency filing for its core KirchMedia business
seems likely early next week.
A key factor in its failure was a foray into
pay-television, which drained cash, and expensive purchases of
Hollywood films and a stake in the Formula One motor racing
business.
Mayor Burkert, a member of chancellor Gerhard Schroeder's
SPD party, pin parts of the blame for Kirch's on the
opposition CSU and Bavarian premier Edmund Stoiber, who played
a pivotol role in lending Kirch money through the half-state
owned Bayerische Landesbank.
Stoiber is a challenger to centre-left Chancellor Gerhard
Schroder in the September elections.
"They obviously didn't ask if Kirch if it was in a
position to pay the money back," she said. "It's what we call
Spetziwirtschaft or buddying up, it is dangerous for
everyone."
Kirch's collapse would be the second blow for the city and
Bayerische Landesbank in recent days after planemaker
Fairchild Dornier, filed for insolvency.
The government, wide off the mark on its unemployment
pledge and burnt by the collapse of building firm Holzmann,
has stood back from the Kirch crisis, suggesting only that
credit could be extended to football clubs caught up in the
crisis.
Germany's biggest union Verdi, incensed at this
suggestion, has called on round table talks to secure jobs at
Kirch.
"There will be good football even if they earn millions or
not," said Steffen Schmidt, a union spokesman. "Those people
who work for Kirch won't know how to pay their rent."
Meanwhile employees in Kirch offices in Unterfoehring and
neighbouring Ismaning, quiet suburban villages with perfectly
manicured gardens and picturesque houses, were in dark mood.
"There are few jobs on the market at the moment anyway,"
said one employee. "If Kirch goes bust we'll have little
choice."
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