Yesterday, German media mogul and billionaire Leo Kirch declared bankruptcy KirchMe

Yesterday, German media magnate and billionaire Leo Kirch announced the bankruptcy of KirchMedia, the most profitable division of the KirchGruppe holding, one of the world leaders in the field of television broadcasting and the sale of rights to television broadcasts. The second division of the holding, KirchPayTV, also went bankrupt. KirchGruppe's total debts are estimated at 6.5 billion euros (about $5.7 billion).
Creating his extensive empire over half a century, Leo Kirch, now 75 years old, became famous for his aggressive style and extraordinary decisions. But his recent multibillion-dollar investments in purchasing rights to broadcast expensive sporting events and films have not paid off. Thus, KirchGruppe paid $1.4 billion for the rights to broadcast football Bundesliga matches for five years, $2.4 billion for the 2002 and 2006 FIFA World Cups, and more than $1 billion for the rights to broadcast Formula 1. But the leading pay TV channel Premiere, part of KirchPayTV, was unable to attract a sufficient number of subscribers and in 2001 alone brought the company losses of $78 million. The total losses of KirchPayTV in 2001 amounted to $759 million. At the same time, the debts of the entire KirchGruppe amounted to 6.5 billion euros ($5.7 billion), including about $3 billion in overdue bank loans. Attempts to convince banks to postpone the debt payment deadline were unsuccessful. On Monday, KirchMedia's creditor banks came up with a project to restructure it, providing for the creation of a new company, to which KirchMedia's profitable assets received by the banks for debts will be transferred. The restructuring will cost hundreds of millions of euros. The bankruptcy of KirchMedia will entail the redistribution of one of the largest media markets in the world. One of the consequences will be a reduction in the foreign presence in the German media market, which has always been opposed in Germany. German parliamentarians were extremely negative about the prospect that the country's largest information holding would end up in the hands of Italian Prime Minister Silvio Berlusconi or Australian media tycoon Rupert Murdoch. After KirchMedia shareholders failed to propose an acceptable plan to purchase KirchMedia, this threat faded into the background.
But the collapse of Leo Kirch's empire will affect more than just the media business. It has already jeopardized the Bundesliga, which largely existed at the expense of KirchMedia. However, the German government will suffer the most, with this being its fourth major blow in a matter of weeks. Let us recall that the bankruptcy of KirchMedia was preceded by the collapse of the German construction company Philipp Holzmann, the aircraft manufacturer Fairchild Dornier and the largest manufacturer of office supplies Herlitz.
Literally a few hours after the bankruptcy of KirchMedia, KirchPayTV also declared bankruptcy.

NATALIA Kommersant-SKORLYGINA

Newspaper "Kommersant" No. 61 dated 04/09/2002, p. 5

Authors:

Natalya Skorlygina

Leo Kirch's empire collapsed