BERLIN -- Germany's troubled media giant Kirch Group may push back the merger of its flagship KirchMedia business with its TV group ProSiebenSat.1.
A source close to Kirch told
Daily Variety that "the merger would in all likelihood be delayed" in view of the company's financial difficulties. KirchMedia, the group's successful film, TV and sports rights subsid, was set to merge with ProSiebenSat.1 in June.
Officially, the company has said the merger will still take place.
But with billions of dollars to be repaid in the coming months, shareholders demanding refunds on stakes in Kirch holdings, and debt of at least $5 billion, Germany's biggest media company is near paralysis, and media analysts are increasingly skeptical about the merger and the public listing it would entail.
One analyst said there might be hope for KirchMedia, the group's most successful division, if it were shielded from the parent company's troubles, which stem mainly from its pay TV operations.
Meanwhile, Kirch looks to be at an impasse with its creditor banks.
Company is looking to downsize its wide-ranging operations and focus on its core TV business. However, it is reportedly not yet ready to shelve its money-losing pay TV operation, and therefore unlikely to sell its majority stake in Formula One motor racing, which it needs to keep its pay TV offering attractive.
Kirch's biggest creditor, Bayerische Landesbank, is pushing Kirch to sell its Formula One holding along with its 40% stake in newspaper publisher Springer as well as its holding in Spanish web Telecinco.
The HypoVereins Bank has formed a consortium to purchase the Springer shares for about $1 billion, but German media reports said a sale could be complicated by the fact that the holding is being used as collateral by several other banks, including J.P. Morgan Chase and Lehman Brothers.
While Kirch had previously vowed never to sell its Springer stake, the fact that it is now in the process of doing so illustrates the gravity of its dilemma. A Kirch bankruptcy would be the single biggest company bust in Germany's post-war history.
Kirch is also said to be negotiating with Springer to reduce the price of an 11.5% stake in Kirch web ProSiebenSat.1, which it is being forced to buy back from the publisher for $675 million.
Although Kirch initially questioned the legal validity of Springer's put option and threatened legal action, it is now pushing for a 40 to 45% reduction in the price, according to German daily Sueddeutsche Zeitung.
Company is reportedly close to selling 16% of Telecinco to the web's other shareholders, including Italy's Mediaset, for an estimated $320 to $430 million.
Kirch said talks regarding the sale of its Telecinco stake were going smoothly but declined further comment.
Contact Ed Meza at
ed.meza@mannaa.de