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Thursday, 21 February, 2002, 05:52 GMT
Kirch 'open' to offers for F1
Debt-laden German media giant Kirch has confirmed the media rights to Formula One motor racing are up for sale.
Kirch spokesman Hartmut Schulz said the company is "open for other equity investors, particularly for the carmakers" to become involved in F1.
KirchGruppe, one of Germany's biggest media empires and the owner of the rights to football's next two World Cups, is weighed down by debts of at least $5bn (£3.5bn), many of which fall due this year.
Last week it held talks with its bankers as the list of creditors demanding rapid repayment lengthened.
Murdoch set to gain?
Kirch also has plans to offer Rupert Murdoch's News Corp a "substantial" stake in its TV business in the hope of resolving its debt to him, the Financial Times reported on Wednesday.
And a Kirch spokesman denied reports that Mr Murdoch had travelled to Berlin this week for talks on the the future of the struggling group.
The paper said advisors to group founder Leo Kirch plan to start soliciting offers for the 58% stake in Slec, the company that controls the broadcasting and marketing rights to Formula One.
British racing tycoon Bernie Ecclestone was thought to be considering a bid to buy back the rights to F1 he sold to Kirch last year.
The FT reported he was likely to offer $800m (£560m), about half of what Kirch paid for the rights. But Kirch denied reports it had received an offer from Mr. Ecclestone.
Many of Kirch's debts flow from its ownership of Premiere, Germany's biggest pay TV platform, which is nonetheless loss-making.
Australian media tycoon Rupert Murdoch owns a 22% stake in Premiere, through British satellite broadcaster BSkyB.
Under the terms of ownership, he can force KirchGruppe to buy back this stake for £1bn in cash in October - much more than Premiere's current market value.
To avoid this, KirchGruppe was reportedly considering offering Mr Murdoch's News Corp a much bigger stake in its business.
KirchGruppe has held internal discussions about a deal that would give Mr Murdoch "significantly increased influence" over KirchMedia, the group's core rights and broadcasting business, the FT reported on Wednesday.
It cited an advisor to Kirch whom it did not name.
Another possibility under discussion would be the transfer of both Premiere and a large stake in Kirch's commercial TV business, the paper said.
But Mr Murdoch insists he wants cash for the Premiere stake and is not interested in any more shares in Kirch's businesses.
Expansion plans fall apart
Leo Kirch made his fortune by buying up the German language television rights of many Hollywood movies during the 1960s and 1970s.
After deregulation of the broadcasting sector, he expanded into television, setting up his own free-to-air television station, and the Premiere pay-TV channel.
To attract customers, he bought expensive sports rights just at the height of the internet and media boom. His critics say that he was paying well over the odds.
Burdened with debt, KirchGruppe is now beleaguered on all fronts.
German television viewers - accustomed to receiving between 10 and 30 free television channels on air or through cable - have been slow to sign up to the pay-TV channel.
Shares in his firm's Pro Sieben Sat 1 Media group, which encompasses the four television channels, have rapidly been dropping in value, shrinking in line with advertising revenues and fierce competition from rivals.
Strategic partners like media group Axel Springer, which just posted its first loss in history, are now calling in their original investments.
The firm holds a stake in Pro Sieben Sat 1 Media, but has the option to sell it back to Kirch for 767m euros (£460m).
KirchGruppe owns 40% of Axel Springer in return, but can not sell this stake as it is the security for a loan from Deutsche Bank.
Several banks that provided loans to Kirch Gruppe have already gone on record that they will not continue to support the firm much longer.
German media reports that two bank creditors of the company, HVB and Dresdner Bank have proposed to buy Kirch's Springer stake for 1.1bn euro, giving the company a breathing space to start paying obligations. No deal has been announced yet.
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