Kirch fate in air as banks, stakeholders circle
Group deal may be sink or swim
On Tuesday, banks were said to be waiting for Rupert Murdoch and Silvio Berlusconi, the group's most prominent stake holders, to present an acceptable takeover plan.
Meanwhile, some Teutonic politicians continued to speak out against a Murdoch and/or Berlusconi bid. Monika Griefhahn, head of the German parliamentary committee on culture and media, said media giants who operate on a worldwide scale must be stopped from attaining a foothold in the local TV market.
While more specific discussions were expected to take place Tuesday, a concrete solution or restructuring plan was still unlikely.
Kirch's fate remains very much in the air.
Seeing a company with 9,500 employees go bankrupt would not be a pretty sight, but at least one key local analyst stressed that letting it fall into insolvency would be the most logical thing to do.
"Shareholders have an incentive to let it go bust," he said, adding that an insolvency would provide welcomed advantages, such as the disintegration of crippling rights contracts with major Hollywood studios.
A Kirch bankruptcy would see the costly film rights go back to the studios and leave new owners in a better position to negotiate deals at more realistic prices.
Another reason shareholders may not want to help save the company is persistent rumors that the its debt is far greater than the stated $5.7 billion. Indeed, junior shareholders could end up trying to save the Titanic with a cork if Kirch has hidden loans secured by major assets.
ProSiebenSat 1, Kirch's terrestrial broadcaster, is the most attractive asset. But it remains unclear whether or not it also has been abused as collateral since a lot of information remains out of the public eye.
In other words, shareholders won't decide to save Kirch until they've combed through the books.
The company also faces credit payments of $150 million in coming weeks, but shareholders have yet to OK an emergency injection of capital to cover those liabilities.
While Italo Prime Minister Berlusconi's presence has become increasingly problematic for German leaders, the Teutonic attitude toward Murdoch seems to be softening.
The global mogul may be the only white knight with the savvy and expertise to save all those German jobs and keep as much of the Kirch empire together as possible.
He also has a trump card in the form of a $1.4 billion put option on his investment in Kirch's pay TV division that may well get him what he wants.
