Kirch media empire’s holding company follows main divisions into bankruptcy
By David McHugh AP Business Writer
FRANKFURT, Germany (AP) – The last pillars of Germany’s failed Kirch media empire declared bankruptcy Wednesday as two more parts of the group followed its television and film-rights businesses into bankruptcy.
The move completed Germany’s biggest bankruptcy since World War II – the collapse of the nation’s largest private television broadcaster under debt of some 6.5 billion euros ($6 billion) piled up with a money-losing venture into pay television and acquisitions that didn’t pay off.
TaurusHolding and KirchBeteiligung sought protection from creditors in a Munich court, a court spokesman said.
TaurusHolding controlled the three main parts of Kirch: television and film-rights division KirchMedia, which filed for bankruptcy in April; KirchPayTV, which sought similar protection in May, and KirchBeteiligung, which filed for bankruptcy along with TaurusHolding.
KirchBeteiligung holds stakes in other companies, including a 40 percent share in Axel Springer Verlag, publisher of the country’s best-selling newspaper, Bild, and a majority in Formula One auto racing. The Springer stake is pledged as collateral to Deutsche Bank to secure loans Kirch wasn’t able to repay.
KirchPayTV runs the group’s troubled Premiere pay TV service, which lost 2 million euros ($1.9 billion) a day and caused much of Kirch’s trouble. It couldn’t lure subscribers away from the 30 stations already available on ordinary cable, while Germany’s TV tax of 16 euros ($15) a month to support public television made people reluctant to shell out more.
The earlier bankruptcies had already stripped the company’s founder, 75-year-old Bavarian entrepreneur Leo Kirch, of control of his businesses, which are now being overseen by bankruptcy administrators working with creditor banks.
Kirch’s collapse far exceeds the previous record postwar German bankruptcies, the 1994 failure of construction magnate Juergen Schneider with debt of 5 billion German marks ($2.25 billion).
The banks say they are trying to find new investors to restructure the parts of the group that are still commercially viable.
These include KirchMedia’s film and sports rights and its profitable ProSiebenSat.1 group of four national television stations, now that they no longer have to subsidize KirchPayTV.
Premiere is also still broadcasting despite its losses and seeking to restructure.
Germany’s Commerzbank, a leading creditor, said Wednesday it was willing to join an effort to buy a restructured KirchMedia, which it valued at between 1.8 billion euros and 2.5 billion euros ($1.7 billion to $2.4 billion).
“We are making every effort to realize this project,” spokesman Peter Pietsch said. “We intend to return KirchMedia to the road of success.”
No investor group had been formed yet, he said. Media reports have focused on Essen-based newspaper group WAZ and Sony Pictures’ Columbia Tristar unit.
A WAZ spokesman said the company had made inquiries but no formal offer. Sony Pictures could not immediately be reached for comment.