BERLIN — The Kirch Group’s loss-making pay TV unit Kirch Pay TV filed for insolvency Wednesday, five weeks after sister division Kirch Media.
The news had been widely expected as paybox Premier continues to bleed 2 million euros ($1.77 million) a day.
Last month Premier topper Georg Kofler warned the web had four months to find an investor or shutter.
Premiere’s failure to attract subscribers was largely to blame for the bankruptcy of Kirch Media, Kirch’s core television and rights division, which supplied it with content and had costly output deals with Hollywood studios.
Banking sources said that Kirch Media’s insolvency management is set to rehire fallen Teuton media giant founder, Leo Kirch, and former Kirch Media head Dieter Hahn as consultants for two years for a reported seven-figure salary.
Kirch and Hahn are still part of the management of Kirch Group’s Taurus Holding, which grouped Kirch Media, Kirch Pay TV and KirchBeteiligung.
Kirch Media managers said they could withdraw April’s insolvency claim if the division gets a cash injection.
They are still in talks with minority shareholders Rupert Murdoch and Italian prime minister/media mogul Silvio Berlusconi about increasing their stakes and are also looking for new investors. Company needs an estimated $730 million to stay in business.
An alternative would be to move Kirch Media’s assets to a new holding company and bring in new investors.
Kirch Media’s restructuring could mean the shuttering of unprofitable assets.
Meanwhile, Deutsche Bank looks increasingly likely to grab the Kirch Group’s 40% stake in newspaper publisher Axel Springer.
Commerzbank and consortium partners BayernLB and Dresdner Bank recently gained approval to purchase the stake for $910 million, but a deal has yet to be struck, and time is running out.
The Springer stake is collateral for Deutsche Bank’s $660 million Kirch loan due this week. If the banks fail to finalize the purchase, the stake will automatically go to Deutsche Bank.
Kirch needs the proceeds from the Springer sale to pay off some of its creditors but will not see a penny if it goes to Deutsche Bank, whose relationship with Kirch has broken down.
Leo Kirch filed a lawsuit against Deutsche Bank chairman Rolf Breuer last week accusing him of compromising the company’s creditworthiness and betraying business confidentiality with comments he made about Kirch’s financial troubles earlier this year. Breuer has called the litigation unsubstantiated.
(Reuters contributed to this report).