Wednesday, 27 March, 2002, 20:07 GMT
Berlusconi firm 'abandons' Kirch
Rupert Murdoch (left) is a leading shareholder in
Leo Kirch's media empire
The odds of German media empire Kirch Gruppe emerging intact from its financial crisis have lengthened with the refusal by a leading shareholder to pump in extra cash. Mediaset, a broadcaster controlled by Italian Prime Minister Silvio Berlusconi, said it would not raise its investment in Kirch, which is said to need an 800m euro cash injection to remain afloat. "We don't intend to put more money into this matter," Mediaset president Fedele Confalonieri said. But Mr Confalonieri gave Kirch chiefs a ray of hope by saying he would "consider" plans put forward by creditors "before any sort of takeover plan". Further hope for Kirch came with a report that the firm needs a bridging loan of 150m euros to ensure its short-term survival, compared with earlier estimates of a 230m euro loan. "Insolvency is not a matter of the next 24 hours," a source told Reuters news agency.
Brinkmanship?
Mediaset had been thought to have been behind a plan to inject 800m into Kirch in return for taking control of the core KirchMedia division, which owns Germany's largest commercial broadcaster and rights to Hollywood films and World Cup football. Other investors involved include Rupert Murdoch's New Corp. Observers have questioned whether Mediaset's latest statement is part of a brinkmanship strategy aimed at forcing Kirch Gruppe's founder, Leo Kirch, to accept the deal. "They are playing poker," the Reuters source said. The Munich-based Kirch empire, which has interests in a range of media, has been undermined by debts, said to total at least 6.5bn euros, and its pay-TV arm, which is said to be losing 2m euros per day.