The last few days have not been kind to debt-laden German media giant Kirch Gruppe.
On Friday came the news that its pay-TV service Premiere World had managed to increase its subscriber base by a paltry 110,000 (5%) in 2001, bringing the total to 2.41 million.
Now it faces a deadline for repayment of a E460m loan from Dresdner Bank. The initial repayment date was in December, but was extended to today (Tuesday).
Rumour has it that Kirch was to finance the repayment by selling its 25% holding (worth around E500m) in Spanish TV channel Telecinco, one of the most profitable broadcasters in Europe. However, no deal has yet been made, and talks with potential buyers – said to include Italian group Mediaset and a Spanish firm – may continue to the end of the month or even into February.
Berlin-based paper Der Tagesspiegel claimed Kirch is back in negotiations with Dresdner, adding: "The decision as to whether Kirch can repay the loan has not yet been taken."
The disappointing figures at Premiere World – estimated to have lost over E500m last year – come at a sensitive time, as they may be key to whether the German conglomerate has to fight for survival later this year.
Through British broadcaster BSkyB, Rupert Murdoch’s NewsCorp holds a 22% stake in the unit, which he has the option to sell back to Kirch in October. Speculation late last year suggested that Murdoch was planning a Machiavellian scheme to topple the Kirch empire by forcing it to buy back the stake, a purchase it may be unable to make due to its debt mountain [WAMN: 07-Dec-01].
Last week Murdoch announced he had not decided whether to get rid of the holding, saying it depended on Premiere World's performance [WAMN: 10-Jan-01]. The new figures will do little to encourage him to hang on to the stake.
News source: Handelsblatt (Germany)