This article was updated at 9:33 p.m.

BERLIN — Haim Saban’s takeover of the assets of bankrupt TV giant Kirch Media has collapsed after the U.S. billionaire failed to meet the conditions to seal the deal.

Saban Capital Group and Kirch Media’s insolvency administrator said in a joint statement Wednesday that they had agreed to “amicably annul” the sale of Germany’s biggest broadcaster ProSiebenSat 1 and Kirch’s vast film rights business, which includes the largest programming library in Europe.

Companies admitted that the open issues among the seller, buyer and the creditor banks could not be clarified by the agreed deadlines. For the purchase of ProSiebenSat 1, that deadline was May 31.

The end of the deal in effect squelches Saban’s plan to re-enter the international media fray after a three-year absence and dashes immediate hopes of opening up the German market to U.S. interests.

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Teutonic insiders suggested that the German side had become increasingly exasperated with the Saban camp in recent weeks over the prolonged and niggling negotiations; for its part, the Saban contingent grew increasingly reluctant to overpay for assets that were sinking in value against a rising euro and slumping ad market.

“Why are you asking me to pay more for something that’s worth less?” is how one insider described Saban’s current attitude toward the deal.

Specifically, the Kirch creditor banks recently rejected Saban’s request that they inject $250 million in new loans to the business; the likelihood that he would have to tender $300 million for the outstanding shares in ProSiebenSat.1 further soured the mogul on the deal.

Kirch Media’s creditors, which include HypoVereinsbank, Commerzbank, BayernLB and DZ Bank, last week agreed to give Saban more time to present his plan to finance the $615 million acquisition of ProSiebenSat 1 and agree to final terms for repaying Kirch’s film library debt.

But they also granted Kirch Media insolvency administrator Michael Jaffe the power to pull out of the deal if he saw fit.

‘Power’ play

Saban, who made a fortune with children’s fare like “The Power Rangers” and the sale of Fox Family Worldwide to Disney, had been in negotiations to acquire the core assets of the insolvent Kirch Media since March, when he edged out rival bidder German publisher Heinrich Bauer with a e2 billion ($2.34 billion) offer.

Saban had been seeking to wrap up the deal before ProSiebenSat 1’s annual shareholder meeting June 16.

Deal would have given Saban a 72% controlling stake in ProSiebenSat 1 and 100% of the Kirch library, making him the first Hollywood player to claim a major stake in the world’s second largest TV market.

The acquisition had been plagued by problems from the get-go, however.

A planned partnership with French TV group TF1, which had been expected to take up to a 50% stake in the assets, fell through after TF1 got cold feet and lowered its planned investment to a less-risky 10% share.

Talks with equity investors on both sides of the Atlantic were also fruitless, and the skyrocketing euro meant a 10% markup on what had initially been considered a bargain.

Saban also wrangled with Kirch creditors over repayment of loans attached to the licensing business while facing a mandatory offer to buy out ProSiebenSat 1 minority shareholders that could have cost him an additional $500 million — a legal technicality he was trying to circumvent.

Ad slump

To top it off, the ongoing ad slump pushed ProSiebenSat 1 into the red in the first quarter of the year. That in turn prompted its creditors to stem a $500 million credit line that was originally meant to secure the group through 2004, meaning Saban would have had to pump even more cash into the flailing company.

Deal initially called for Saban to inject some $175 million into the assets.

The seemingly standoffish relationship between Saban and the banks quickly led to Kirch Media’s much-publicized “Plan B,” now likely to be implemented.

Tapping Thoma

The banks and Kirch Media’s current chief exec, Hans-Joachim Ziems, are now set to go it alone with the help of former RTL TV topper Helmut Thoma, who is rumored to be in line for the top job at ProSiebenSat 1.

Thoma agreed last month to be included on an alternative list of new supervisory board members — drawn up by Kirch Media’s management in case Saban’s takeover fizzled — to be presented to ProSiebenSat 1 shareholders at the June 16 meeting.

The “new” Kirch management, along with the banks, will continue to run ProSiebenSat 1 and the licensing business, and will likely have to invest up to $350 million for a capital increase at the cash-strapped broadcaster.

Following news of the deal’s collapse Wednesday, shares in ProSieben dropped nearly 10% to $4.84 before leveling off at around $5.00.

(Elizabeth Guider in Los Angeles contributed to this report.)