BERLIN — Germany’s financially troubled media giant Kirch Group inched closer to the brink Wednesday — it needs $200 million immediately or face bankruptcy in the coming days.
Rupert Murdoch’s News Corp., which has a stake in Kirch’s pay TV unit, looks set to reject efforts by creditor banks to provide an emergency cash injection to keep the company afloat until the end of the month.
Prominent shareholders like Mediaset, owned by Italian Prime Minister Silvio Berlusconi, backed away from further investments in the hemorrhaging company.
Banks and investors reportedly are at odds over how to divide the financial burden of saving the company, which is squirming under $5.7 billion debt due to mounting losses at Kirch’s Premiere World pay TV unit and a downturn in advertising across the group.
The banks and minority shareholders, including Murdoch and Berlusconi, had sought agreement on a joint $750 million rescue package. But Kirch reportedly needs $200 million immediately to meet obligations due by month’s end. Kirch execs nevertheless sounded optimistic, saying they hoped for a constructive resolution.
While talks focused on a deal for Mediaset and News Corp. to take control of Kirch Media, the group’s core business that controls five German TV channels and Europe’s biggest film rights library, the Italian group warned Wednesday it wasn’t prepared to invest more money in Kirch.
“We don’t intend to put more money into this matter,” Mediaset’s president, Fedele Confalonieri, told a news conference in Milan. Confalonieri added that Mediaset absolutely did not have a takeover in mind and that discussions with Kirch’s creditors had yet to produce concrete plans.
Leo would have to leave
News Corp. has yet to comment on the negotiations, which would have 75-year-old founder Leo Kirch cede control of the company he built over the last 46 years.
Proposals are said to include BayernLB, HypoVereinsbank, Commerzbank and DZ Bank assuming a minority stake of at least 26%, with some minority shareholders upping individual holdings.
In addition to News Corp. and Berlusconi’s Fininvest and Mediaset companies, Kirch Media shareholders include German retailer Rewe, Saudi Prince Al Waleed bin Talal and U.S. investment groups Lehman Bros. and Capital Research, all of which own a combined 21%.
It remains unclear whether Leo Kirch, who holds the remaining 79% with his son, will agree to the deal. The embattled topper is reportedly asking for a hefty percentage of the profits from the company’s rights to the 2006 World Cup soccer championships before offering his resignation.