BERLIN — A group of creditor banks is stripping Leo Kirch of his once-mighty empire, but the feisty 75-year-old media baron is battling to keep some of his company jewels, particularly World Cup soccer.
Kirch appears ready to call it quits after 46 years in Germany’s entertainment biz, but he is driving a hard bargain for his company’s lucrative assets in return for relinquishing control of cash-cow Kirch Media, his core terrestrial TV, rights and production business.
Kirch is demanding a 70% share of profits from German-lingo rights to the 2006 World Cup, which will be held on home turf, as well as commission on worldwide sales. That is his condition for handing the reins over to the banks and minority shareholders, including News Corp. topper Rupert Murdoch and Italo Prime Minister and media mogul Silvio Berlusconi, as part of a $700 million rescue.
Banks, Murdoch and Berlusconi’s advisers and other investors continued to hammer out a deal Tuesday to divvy up the Kirch Group, which is 6.5 billion euros ($5.72 billion) in debt after an acquisition spree and a costly foray into pay TV.
Murdoch and Berlusconi are expected to end up with control of Kirch Media, the group’s most valuable property which is 73% owned by Leo Kirch, with the banks possibly retaining a minority share.
However, Berlusconi’s media group Mediaset may not seek a major stake. Murdoch, on the other hand, is said to want the biggest piece of Kirch’s pie. A deal is expected this week.
Splitting the pie
With German politicos notoriously jittery about foreign ownership of major TV assets, it is unlikely a single player would end up with control of Kirch Media, noted one observer. Murdoch’s past attempts for a foothold in the local market have met aggressive political resistance.
Murdoch has long eyed Germany — Europe’s biggest TV market — but has been limited to minority stakes in small TV channels — which he sold to take a 22% stake in Kirch’s loss-making pay TV web.
He also holds a 2.5% stake in Kirch Media along with Berlusconi, Saudi Prince Al-Waleed bin Talal, U.S. investment group Lehman Bros. and German retailer Rewe.
Kirch has declined to comment on talks.