Outcry sends media giant to commercial banks

BERLIN — The Munich-based Kirch Group is withdrawing an application for a loan from the Bavarian state-owned Landesanstalt fuer Aufbaufinanzierung (LfA), but said it would continue to seek credit from a group of commercial banks.

Reports in the German press last week that the LfA was among the consortium of Bavarian banks considering granting a loan of around $600 million to media mogul Leo Kirch were greeted with public protests.

Despite the LfA’s claims that the loan in question would be offered according to normal business conditions, opposition parties in the Bavarian state parliament charged that the LfA, which was thought to be supplying half the loan amount, were granting what amounted to state subsidies to Kirch. In response to the objections raised, Bavarian minister president Edmund Stoiber said on Wednesday that a decision on the LfA’s participation in the loan plan would be suspended until April 8.

Kirch Group managing director Dieter Hahn told Daily Variety Friday that the Kirch Group chose to cancel its application with the LfA as a result of the “non-objective public discussion” currently taking place in Germany. Hahn stressed that the Kirch Group had not been seeking state subsidies of any kind, and expected that the loan sought would be covered by commercial banks.

Hahn said that the loan would be used “to finance the normal business activities of the Kirch Group,” and denied speculations that the application came as a result of the troubled start of Kirch’s digital pay TV platform DF1.

With only 30,000 subscribers eight months after launch, DF1 is reported to be costing Kirch $1 million a day

The application for credit, Hahn added, had been under discussion since October, and was unrelated to the announcement from Rupert Murdoch’s BSkyB in early March that it would not, as planned, take a 49% stake in DF1.

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