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Kirch creditors to pick top bids

Former media magnate Leo Kirch
Former media magnate Leo Kirch  


By CNN's Sonia Sequeira

(CNN) -- The auction for KirchMedia is under way, with the group's creditors due to select the top bidders on Thursday.

It's an attractive deal: KirchMedia holds Europe's largest film rights library and boasts an impressive array of sports rights -- including the broadcasting rights to the 2006 football World Cup.

The crown jewel, though, is a controlling stake in ProSiebenSat.1 -- Germany's biggest free-to-air broadcaster.

The big question is: can KirchMedia stay in German hands?

"It's actually more or less impossible at the moment," says Theresa Wise of Accenture.

"Bertelsmann doesn't have the cash, or in this case probably not the regulatory authority to buy this particular asset. Kirch has clearly run completely out of cash, there's some severe liquidity problems so ... they're having to look for international investors to actually solve some of this and invest in it in a valuable way."

Germany has no restrictions on foreign ownership in its media outlets. This is an unprecedented opportunity to get into the world's second biggest media market as measured by advertising revenue.

It's no secret Chancellor Gerhard Schroeder is pushing strongly for a domestic player to take the reins. He's perhaps reluctant to shake the status quo ahead of September's national election.

Most non-domestic hopefuls have tried to ease the way by teaming up with a German player.

"The government, and maybe as well the German opposition, they both believe that the German media are very well advanced," says Hans Redeker of BNP Paribas.

"Maybe not as profitable as foreign media, but they are keeping a broad-based information system, and that is maybe one of the big differences of the German media scene to maybe foreign media scenes."

KirchMedia filed for insolvency in April. Since then, the bidding process has been lengthy, complicated and shrouded in secrecy. There's no sign of when a final decision will come.

These second-round bids remain legally non-binding amid rumoured complaints that KirchMedia's adviser UBS Warburg has given out limited information.

Ultimately, KirchMedia's creditors will have the last word.





 
 
 
 




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