Battling For The Media Giant

More than 80 parties have expressed interest in insolvent film rights trader and broadcaster KirchMedia. But few have made progress in putting together bidding consortia for the core unit of media mogul Leo Kirch’s empire.

A Munich court has placed the company under its formal jurisdiction, officially opening the door for its liquidation.

Leading the list of interested parties is a consortium including Germany's Commerzbank, Essen-based publisher WAZ Mediengruppe, and Sony Corp's Columbia TriStar.

But this media thriller took a new turn on Monday evening, when the WAZ management announced it was pulling out of the deal. Commerzbank has said, however, that it is open to other partners in the bidding consortia.

A golden opportunity

The WAZ move opens up new possibilities for one of Germany's most influential publishers, the Axel Springer Verlag. The Hamburg-based group is busy putting together a competing consortia, together with fellow publishing house Heinrich Bauer Verlag.

This could give Springer, publisher of Germany's top-selling tabloid Bild, a chance to get its foot in the door of the television sector.

Either way, the creditor banks are rubbing their hands together in glee. They hope the added competition from Springer will bump up the reported two billion euro the Commerzbank consortium is said to be offering for KirchMedia.

An ironic twist

If Springer were to increase its stake in KirchMedia, it would be an ironic twist of fate. Leo Kirch held 40 percent of Springer Verlag until his empire crumbled. For years, he unsuccessfully tried to gain majority control of the publisher, who adamantly opposed such a move.

At the end of January, Springer invoked a clause to force the 767 million euro ($726 million) sale of its 11.5 percent stake in Pro Sieben Sat.1 Media, which is part of KirchMedia. The move prompted Kirch's collapse.

Industry observers believe the Springer consortium is seeking to acquire a stake greater than 25 percent in KirchMedia in order to have veto power over the company's strategic decisions. However, many analysts are skeptical that it will be successful. They say Springer and Bauer cannot find an adequate financial investor for such a deal.

KirchMedia will hold a meeting of its creditors on August 1, where it’s expected to unveil bids from consortia of German and international investors.