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Monday, 8 April, 2002, 09:38 GMT 10:38 UK
Q&A: Kirch's insolvency
Bankers and investors continue to debate the future of Kirch, the massively indebted German media empire. The firm, which owns the rights to some of the biggest international sporting events, has declared its core media unit insolvent. BBC News Online picks over the implications of Kirch's troubles.
I'm looking forward to watching the football World Cup this year. Will my viewing be disrupted?
Almost certainly not.
True, Kirch has the non-US television rights not just to this coming World Cup, but to the 2006 tournament as well - a privilege that it paid $2.2bn to acquire.
The fact that it could not persuade broadcasters to pay enough for local World Cup rights - along with parallel disappointments in other sports - has been one of the main factors behind Kirch's slide into trouble this year.
But as far as the actual broadcasts go, even a cataclysmic corporate bust should not disrupt things, since deals with local broadcasters - the BBC and ITV jointly in the UK, for example - will have been agreed long ago.
The 2006 World Cup, set to take place in Germany, may be another matter, however - but there is plenty of time to patch together a back-up plan.
Could there be any longer-term effects on football?
The mysterious money-men behind the beautiful game have reason to be nervous.
The Kirch debacle, together with fading club revenues, slowing advertising and promotion earnings, ballooning player wage demands and the woes of broadcasters such as the UK's ITV Digital, has underlined the fact that football is not the sensational investment it may have seemed five years ago.
Big companies, which once eagerly jostled for position in football club boardrooms, are increasingly likely to write off the sport as a Bermuda Triangle of investment.
More specifically, and more positively for fans, Kirch is likely to spark a rethink of the way the World Cup is broadcast and marketed.
Football authorities are likely to become more wary of handing sole rights to one firm, and bids for rights may be based on something more concrete than the fool's paradise economics of the mid-1990s.
It would be nice to think that football could even become a less mercenary game - but don't hold your breath.
And how about Formula One? Doesn't Kirch have a hand in that?
Indeed, as well as boxing, ice hockey, basketball, golf and tennis.
Kirch's control of the TV rights for Formula One motor racing is even more important - and potentially more damaging to its bottom line - than its World Cup dominance.
Last year, Kirch paid almost $1.8bn for a controlling interest in a consortium owning commercial rights to Formula One.
But it has yet to get its hands on a corresponding slice of the sport's cash flow, and has precious little influence over the way the sport is run.
Although Kirch's Formula One venture is not included in the arm of the firm that has gone insolvent, it seems likely that it will be forced to seek a purchaser - possibly Bernie Ecclestone, the promoter who built the sport into such a cash machine.
In the meantime, racing team owners and big car makers - many of which are keen to increase their influence over the sport - are bidding for greater freedom.
Wholesale changes, ranging from financial juggling to tweaks in race rules, are inevitable even if Kirch does not fail; if it does go belly-up, some disruption to broadcasting seems likely.
I don't care about sport: should I still care about Kirch?
Yes, for a number of reasons.
First, the company's insolvency heralds a shake-up in the European media industry, with politically-inclined magnates such as Rupert Murdoch and Silvio Berlusconi likely to gain a toehold in the continent's biggest market.
Second and in some ways more cheering, Kirch's difficulties - along with a number of other corporate crunches - indicate a sea-change in German business culture.
Until not too long ago, the notion of large corporate failure was anathema, leading to the sort of resistance to change that has - economists say - rendered Europe's economy relatively uncompetitive.
Third, like the ITV Digital palaver in the UK, Kirch's troubles represent the final reckoning for the economic exuberance of the 1990s.
In the same way that wafer-thin tech and telecom firms became massively valued, whopping price tags were slapped on intangible media assets - and companies are now having to pay for that carelessness.
If the dot.com crash, the collapse of Enron and the string of bankruptcies in the telecoms business did not sober up the business world, Kirch certainly will.
So in what form will Kirch survive?
That's the billion-euro question.
Kirch is, as they always say, "too big to fail".
In practical terms, that means its assets contain enough intrinsic value to at least be snapped up and preserved by someone else.
But now that the key KirchMedia unit has declared itself insolvent, the chances of salvaging the firm in anything like its present state look slim.
So far, big media groups have been unable to agree with bankers a strategy for taking the company over, but they are now likely to start circling again, in the hope of picking up stray assets.
Huge chunks of the firm- even, possibly, all of it - may yet survive.
But for Kirch's 9,500 staff, these will be nervous days.
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