Word: kirch
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...Where Kirch will next turn for help is uncertain. It would probably be a bad idea to approach Stoiber, who formally launched his campaign for the German chancellorship last month. Bayerische Landesbank - which is 50% owned by the Bavarian state, where Stoiber has been premier since 1993 - is Kirch?s biggest lender, with an estimated $1.7 billion in loans. Last year, the regional government saw to it that the bank provided a loan for Kirch to acquire a stake in Formula One motor racing. But the bank?s massive exposure to the media empire has raised eyebrows, and political pundits...
Last week Axel Springer said it would exercise its $662 million "put" option to sell to Kirch an 11.5% stake in broadcaster ProSiebenSat.1 Media. (A "put" option is a risk-averse instrument that gives the holder the right to sell an asset at a predetermined price.) It demanded that the payment be settled by April. Kirch challenged the move?s legality, since the deal?s structure was reportedly left open to accommodate changes in German tax law. But as with so many of Kirch?s corporate dealings, there are subplots within subplots...
...Kirch empire?s main arms, KirchMedia already holds a 53.5% stake in ProSiebenSat.1, and is expected to merge with that company should a planned stockmarket float go ahead later this year. But another subgroup, KirchBeteiligungs, holds a 40% interest in Axel Springer. Why would Kirch permit a company in which it has such a sizable stake to cause it so much potential inconvenience? One theory is that the Springer family wants to reacquire shares in their company that Kirch bought in the late 1980s during a failed takeover attempt, and are exercising the "put" option as an arm-twisting tactic...
Things could get a lot worse for Kirch if Rupert Murdoch is thinking along the same lines. Rumors are constantly swirling that Murdoch may use Kirch?s current debt problems to make an opportunistic grab for a greater share of the pie. And he may also have the instrument with which to do it. In 1999, Murdoch?s BSkyB bought into KirchPayTV. But it, too, negotiated a "put" option - come October, BSkyB can elect to sell back its 22% stake in KirchPayTV to Kirch for an estimated $1.5 billion, above market value. Murdoch may demand that Kirch pays...
...only the hovering presence of Murdoch, but other global TV powerhouses such as John Malone?s Liberty Media that may yet figure in Kirch?s future plans. Last September, Malone bid for six of the nine regional German cable systems that incumbent operator Deutsche Telekom was forced by regulators to shed. He also made a play for Kirch, but withdrew after regulators expressed concern...