BERLIN — German media giant Kirch’s troubles intensified Thursday as the embattled group reportedly missed its first payment on a recently expired credit loan from Frankfurt-based DZ Bank.
The loan is said to be a short-term credit line in the millions. Kirch allegedly owes DZ a total €398 million ($350 million) from various loans. Company is struggling under a $5.7 billion mountain of debt and facing further payments due soon.
As a result, financial experts say, DZ could bring the TV titan to its knees by filing insolvency charges against it.
While analysts agree that DZ would have a good chance of bringing about Kirch’s bankruptcy, the bank has signaled no such intention. DZ and other creditors are continuing ongoing discussions with Kirch in an effort to find a resolution.
Company is under increasing pressure to part with its treasured majority stake in Formula One motor racing. Kirch already has its stakes in newspaper publisher Axel Springer and Spanish web Telecinco on the block.
Meanwhile, Kirch is reportedly set to offer the Hollywood studios stakes in its money-losing pay TV operation Premiere World, which has been largely responsible for dragging the group to near bankruptcy – the platform continues to drain $2 million a day.
Kirch has reportedly run the plan to bring in Hollywood heavyweights by its creditor banks. While the move could help revive the flagging broadcaster, it would also provide Kirch with an opportunity to settle its outstanding debt with a number of studios.
Kirch has declined comment but has indicated it is prepared to give up management control of the pay-TV unit. Company has also said it is looking for partners on the pay TV front.
The group has suffered from high-priced multi-year Hollywood film deals it signed primarily for Premiere content. It is currently trying to renegotiate rights contracts with Paramount, Universal and Warner Bros.
As part of the group’s ongoing restructuring measures, Kirch has merged its sports rights businesses, CWL Telesport & Marketing and Prisma Sports & Media, into KirchSport, a subsidiary of the group’s free TV, film and sports division, KirchMedia.
KirchSport Chairman Oscar Frei said amalgamating KirchMedia’s sports marketing activities would streamline operations and allow for expansion. In addition to the World Cup, company holds rights to other high-profile soccer matches as well as the world ice hockey and European handball championships.