Fresh from his thwarted attempts to pull off the purchase of US satellite broadcaster DirecTV, Rupert Murdoch has reportedly wasted no time in dreaming up another huge deal – with the potential takeover target this time being Kirch Gruppe.
Kirch is the biggest commercial television broadcaster, pay-TV provider and media rights holder in Germany. Its acquisition by NewsCorp would make Murdoch Europe’s most powerful broadcaster and the first non-European to own one of the continent's leading terrestrial TV firms.
However, such an eventuality is some way off. It all hinges on NewsCorp’s 22% stake in the KirchPayTV unit, owner of cash-haemorrhaging platform Premiere World. Murdoch has the option of forcing Leo Kirch, owner of the eponymous firm, to buy back the shares in cash on October 1 2002, for a sum which could total E2 billion ($1.8bn).
Due to enormous debts, Kirch may not be able to find the money. In this event, some NewsCorp insiders think Murdoch will simply try to purchase the pay-TV division; others, however, speculate that the failure to pay could trigger the fall of the Kirch empire, with Murdoch at the ready to negotiate a takeover.
“Rupert has really got the hots for the whole of Kirch right now,” said a little bird close to Murdoch. However, other NewsCorp executives are more cautious. “Kirch has a huge amount of debt,” complained one, before adding somewhat cryptically: “Rupert’s dream is for the banks to get a haircut and then he rides in and turns around the pay-TV business and takes control of the whole thing. It will be hard to do. And perhaps he is just looking for a big deal after DirecTV.”
Reacting to the rumours, one Kirch executive retorted: “We have been able to honour our obligations in the past. There have been no discussions [between Murdoch and Kirch about a merger]. It is total speculation to talk about what will happen next October.”
Should speculation turn into fact, a takeover of Kirch may run into strong opposition in Bavaria, where the German group has hefty political support.
News source: Financial Times