Investors Near Deal to Take Over KirchMedia Empire

26 March 2002

KirchMedia, the rights division of embattled German media giant Kirch Gruppe, may be nearing a deal with creditors and shareholders to raise the €800 million ($699m; £491m) in capital it needs to survive.

However, ‘survival’ entails control over the unit being prised from Leo Kirch and redistributed among the various stakeholders – including the media empires of Rupert Murdoch and Silvio Berlusconi.

The agreement will likely involve a humiliating exit for Leo Kirch, whose 80% stake in the unit would be cut to under 50%, and the resignation of Kirch Gruppe managing director Dieter Hahn. Although a deal has not been finalised, all parties are said to be in support of the proposal and the new structure of KirchMedia may be announced later this week.

Investors attending the negotiations are NewsCorp, Berlusconi’s MediaSet and Fininvest, investment bank Lehman Brothers and Kingdom Holdings (owned by Saudi Arabia’s Prince al Waleed). Also involved are Kirch’s creditor banks Bayerische Landesbank, Commerzbank, DZ-Bank and HypoVereinsbank.

The final stakes each party will gain in KirchMedia have not been decided, though insiders stress that no one will have a majority holding, partly to allay fears of a foreign takeover of one of Germany’s biggest media groups.

Politicians have expressed concern at the prospect of broadcast giant ProSiebenSat.1, in which KirchMedia has a 52% stake, falling into the hands of a non-German company.

Such fears were heightened by rumours that Murdoch was mulling a move to take over Kirch, though the structure of the deal currently being negotiated suggest this is not on the cards.

Leo Kirch’s empire is fast slipping from his grasp: Kirch Gruppe’s 40% stake in Axel Springer and majority holding in Formula One motor racing are both up for sale, while pay-TV platform Premiere World needs a major overhaul to avoid bankruptcy.

Data sourced from: Financial Times; Handelsblatt (Germany); additional content by WARC staff