Problems continue to mount at debt-crippled German media mammoth Kirch Gruppe, as speculation mounts that Rupert Murdoch is planning a takeover.
Murdoch is today (Thursday) due to attend a board meeting of BSkyB, the British satellite broadcaster he chairs. A prominent topic of discussion is expected to be what to do with the company’s 22% stake in Kirch’s cash-haemorrhaging pay-TV arm.
One possibility would be to take over the unit to try to make it profitable; another would be to move on and accept the loss. A third choice, however, revolves around an option BSkyB has to sell the stake back to Kirch in October.
Should BSkyB exercise this option, Kirch may well be unable to pay, with rumours last year suggesting Murdoch would then move in to attempt a takeover of the entire group [WAMN: 07-Dec-01].
Media magnate Leo Kirch will have to sweat a little longer yet, though, as the BSkyB board is not expected to reach a firm conclusion today. One notable absentee at the meeting will be Dieter Hahn, Kirch vice chairman, who has stepped down from the satellite firm’s board due to what he admitted was a “conflict of interest”.
The prospect of a NewsCorp takeover of a hefty chunk of the German media industry – and especially a large stake in newspaper giant Axel Springer Verlag – has prompted considerable anxiety in Berlin, where politicians have demanded that Kirch’s assets remain in German hands. The government, however, insists it will not intervene with a state-funded aid package.
Fellow German media group Bertelsmann had been tipped as a possible saviour, with chancellor Gerhard Schroeder said to have met with the group’s chief executive Thomas Middelhoff. Bertelsmann, however, has since ruled out any such move.
Moreover, just when it seemed things could not get much worse for Kirch, Dresdner Bank has reportedly warned the company it will not extend its loan repayment deadline in April. The date has already been put back twice [WAMN: 13-Dec-01; 16-Jan-02].
News sources: Financial Times; Wall Street Journal; MediaGuardian.co.uk