Kirch creditor banks on playing library card
Bauer consortium may set up two companies for stakes
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Move could mean a lower price for a consortium led by German publisher Heinrich Bauer, which last month was picked as the preferred bidder for Kirch's core assets. These include the film library and Germany's biggest broadcasting group ProSiebenSat.1.
Bauer made an initial offer of just under $2 billion.
Library startup
The Bauer consortium is likely to set up two companies, one to buy Kirch Media's 52.5% stake in ProSiebenSat.1 for $700 million and one to buy the film rights library for $1.3 billion.
Sony Pictures TV Intl. is negotiating to join Bauer and its partner -- and Kirch creditor -- HypoVereinsbank.
Bauer, HypoVereinsbank and SPTI are discussing with Kirch's three other creditor banks -- Commerzbank, DZ Bank and Bayerische Landesbank -- how to structure the takeover.
Whether the proposed film library holding company becomes part of the new Bauer-controlled company or is put under the banks' management hinges on SPTI's involvement, per German sources.
Key customer
Also key to an agreement will be the future relationship between the film library and ProSiebenSat.1, which is one of the library's main customers.
ProSiebenSat.1 will likely have to either take an equity stake in the rights company or agree to a long-term rights acquisitions contract.
Despite being Europe's biggest film and TV library -- with movie classics like "Casablanca" and hit TV series including "Star Trek" and "Baywatch" -- it is in dire need of financial investment.
The film stockpile, which was used as collateral against the banks' billion dollar loans, has not been replenished with fresh content and continues to lose value by the day.
That's one reason Bauer was less than enthusiastic about including the library in its acquisition.
Equity infusion
Creditors are said to be pushing Bauer and its partners to inject at least $200 million in equity into the film rights company, otherwise the banks may refuse to take part in the enterprise.
The creditors are due to discuss the proposals at a meeting on Friday.
Kirch Media was the core unit of the Kirch empire that collapsed under billions of dollars of debt in April.
(Reuters contributed to this report.)
