Crumbling German media empire Kirch Gruppe gained a favourable court ruling last week, as its flagship rights unit faces being pared down to its most lucrative assets.

A regional court in Munich decided that Kirch can retain control of its 40% stake in publishing giant Axel Springer until August 30. The shares were used to secure a loan from Deutsche Bank, which wants to take over the holding and sell it. If Kirch has not repaid the debt by that date, the stake will pass to DB.

The ruling means that the bank’s proposed public offering of the shares at the end of the summer [WAMN: 07-Jun-02] will not go ahead for the time being.

The news comes as time runs out for the management of the group’s broadcast rights arm, KirchMedia (which recently filed for insolvency), to decide on the unit’s future – if any.

Last week, advisers reportedly presented top KirchMedia executives with a plan to sell off the bulk of the unit’s assets (66% by revenue), leaving just the highly profitable rights businesses, some entertainment production units and the 50.2% stake in German broadcast giant ProSiebenSat.1.

Although minority shareholders have been trying to put together a refinancing scheme to avoid auctioning the assets, they are not expected to succeed by Monday’s deadline.

Should they fail, the unit will be put into administration within a fortnight, at which point management would have to identify which assets they want to keep and transfer them into a new company which would then be sold as a going concern. The other properties would be disposed of individually.

Another mooted possibility is to put Kirch’s sports rights activities, including the soccer World Cup and the Olympics, into a separate rescue company for disposal.

The sale of KirchMedia’s assets has caught the attention of US giants such as Viacom, AOL Time Warner and Walt Disney Company, alongside German groups like Bauer, Burda, Holtzbrinck, WAZ Gruppe and Axel Springer. UBS Warburg, handling the auction, has asked around 60 companies for expressions of interest by Tuesday and finalised bids by the end of the summer.

Data sourced from multiple sources; additional content by WARC staff