News Corporation yesterday issued a formal denial that it planned a hostile takeover of German media titan Kirch Gruppe, the rebuttal coinciding with a demand by Dresdner Bank that Kirch repay an E500 million ($445m) loan by the end of this month – an ultimatum other banks are expected to echo.

NewsCorp’s denial is extraneous. A classic hostile bid for Kirch would be virtually impossible, even for a warrior as seasoned as Rupert Murdoch – given that the group’s shares are not freely traded on any stock market.

Instead, the canny Murdoch sits on the fringe of the web he has spun around German media magnate Leo Kirch [WAMN: 11-Dec-01] and waits for the flailings to weaken before scuttling in for the coup de grace.

Murdoch’s London flagship title The Times confirmed today (Wednesday) that satellite broadcaster BSkyB, in which NewsCorp has a controlling stake, owns 22% of Kirch’s pay television business Premiere World.

There is a contractual obligation for Kirch to buy back the stake from BSkyB for up to $1.73 billion cash next year, if Premiere fails to perform satisfactorily. The stake could give NewsCorp control over any subsequent restructuring of Kirch plus a grip on its valuable sports rights, among them Formula One motor racing as well as soccer.

Meanwhile, as expected [and egged-on, some allege] by Murdoch, other German banks are getting increasingly restive over their massive loans to the cash-strapped group. And in a separate pincer movement, rival German media giant Axel Springer is expected to exercise a set price option of E766.9m (DM1.5bn) forcing Kirch to acquire its 11.4% per cent stake in listed television broadcaster ProSiebenSAT.1

As the eye of the hurricane approaches, are they downhearted in Kirch’s Munich bunker? “The situation is tough, but I would not call it desperate,” a Kirch associate said on Tuesday.

News source: The Times (London); Financial Times