Kirch declares itself insolvent :- But F1 is safe

[rdjones]

This just in from BBC New Online:

The main unit of the Kirch media empire - owner of the broadcast rights to the football World Cup - has declared itself insolvent.

The declaration came after attempts by rivals and bankers to salvage the group as a going concern foundered last week.

Costly film rights deals and a misjudged foray into pay-television brought the firm to its knees: although the privately held Kirch Group does not publish full accounts, estimates of its debt start at 6.5bn euros (£4bn; $5.7bn).

However, most of Kirch's lucrative sports rights and other assets, including the World Cup, Formula One racing and popular tabloid Bild, are held by other subsidiaries, keeping them well away from the claws of the administrators.

Rescue hopes

There are now rumours that Taurus, the holding company that groups Kirch's web of companies, could itself be declared insolvent.

But Edmund Stoiber, the Bavarian premier and conservative challenger to Chancellor Gerhard Schroeder, has signalled that the group could be rescued by German banks and publishers, keeping aggressive foreign rivals outs.

"Insolvency does not mean the destruction or the end of the company, rather an opportunity and it also means new owners," he said .

Mr Stoiber has a strong political interest in salvaging Kirch since the insolvency will have deep implications for the Bavarian economy, whose relative health has been one of the main planks of Mr Stoiber's appeal.

Leo Kirch, the group's founder, is a personal friend of the Bavarian leader, and the Bavarian government is thought to have been the driving force behind a 2bn euro loan from Bayerische Landesbank.

German press reports say that Kirch's main banks, its financial advisers and the Bavarian government will throw the group a lifeline.

But stitching together a deal will prove problematic: a rescue proposal from investors including media tycoon Rupert Murdoch and Italian Prime Minister Silvio Berlusconi broke down last week.

Bits and pieces

Bankers now expect Taurus to be declared insolvent before any large-scale rescue deal can be attempted.

Alternatively, industry rivals will be keen to acquire some of Kirch's assets, many of which have high intrinsic value.

Some of Kirch's key assets have been shielded from insolvency.

Kirch's Formula One rights are held by its majority-owned SLEC subsidiary, not included in the insolvent KirchMedia unit.

And the firm has already ring-fenced its rights to World Cup coverage in 2002 and 2006, after transferring them to a KirchSport unit in Switzerland.

Fifa's president Sepp Blatter and Kirch's chief executive stripped the World Cup rights - valued at 1.9bn euros - out of the group last month.

It would have been difficult to renegotiate the broadcast rights, with less than two months to go until kick-off.

Boom and bust

Leo Kirch spent almost half a century building up the group which controls Germany's biggest commercial broadcaster ProSieben and 40% of the popular tabloid Bild (also not included in the insolvency announcement).




The group has a workforce of about 9,500.

The insolvency of KirchMedia is yet another blow for German business, which has suffered the failure of a string of well-known corporate names in recent months, including construction firm Holzmann and stationer Herlitz.

There were 32,000 insolvencies in Germany in 2001, 14% than the year before; experts believe the number could rise to 40,000 this year.

[Nicholas]

Does this make the proposed 2008 series redundant? Either way, Bernie wins...

[Sato san]

Does Bernie ever lose

[Number Juan]

no he doesnt he just wins more!!! hes a clever man, as they say you have to get up early to beat Bernie - bloody early.

[Kex]

I personally didn't like Kirch, over the amount they wanted BBC and ITV to pay for the World Cup TV coverage.

[expert]

Quote:
"I personally didn't like Kirch, over the amount they wanted BBC and ITV to pay for the World Cup TV coverage."

I agree, those dirty germans tried to bend over and f*ck the F1-fans as well with their pay per view television. it's nice to see it's game over for them, now...

[Valve Bounce]

It seems that Bernie migh be able to buy back the rights from SLEC for a lot less than he was paid. However, I think that this is a once in a life time opportunity for the F1 manufacturers to get a slice of the pie and if they could buy into SLEC, they just might be able to become the masters of their own destiny.
I always felt that the intention of Kirsch was to have all F1 on pay TV only, and that's what the manufacturers feared. Now if they could buy into SLEC, they could then get a bigger slice of the money from F1 TV rights and keep F1 on free to air TV, which is just what the teams need to stop some from going under like Prost did.

[Maxmil]

Originally posted by Valve Bounce
I think that this is a once in a life time opportunity for the F1 manufacturers to get a slice of the pie and if they could buy into SLEC, they just might be able to become the masters of their own destiny.

Right on Bounce! My guess is that the manufacturers and Bernie will work out some kind of deal. The big issue is going to be the price. For sure Kirch overpaid, but the question is, "How much"?

[Tristan]

Kirch will, shall we say, hardly be missed.
Like ITV digital who've gone and done exactly the same thing with Premiership football. Perhaps we will now have some stock-taking in terms of the money in Europen sport promotion and broadcasting.