APRIL 4, 2002
Kirch begins to crumble
TWO of the banks involved in talks to save Kirch Media have decided they have had enough of the wrangling and have withdrawn from the talks. DZ Bank and Commerzbank have withdrawn from the negotiations following the failure of the parties involved to agree on loans to keep the company afloat. The problem appears to be that the investors involved (which include Rupert Murdoch, Silvio Berlusconi and Prince Al-Waleed's Kingdom Corporation do not want to put any more into the company but expect the banks to do so.
It seems that Kirch, the company that owns the commercial rights to Formula 1, is finally on its last legs and may have to file for bankruptcy protection. The company failed to make a $140m payment due recently to the Columbia film studios and a $420m payment is due next week.
If the company is forced to seek court protection from its creditors, it will be taken over by an administrator who will then decide if it can be saved.
Formula 1 remains untroubled by the Kirch collapse as the Formula OneĻ group (which is apparently how it is now known) remains under the control of Bernie Ecclestone until the end of 2005 thanks to a shareholders' agreement. After that the company will pass into the hands of whoever owns the majority of the shares.
The major impact of all of this is that it has added to the credibility of the planned new GPWC series, being planned by a group of automobile manufacturers. This will start in 2008 unless a compromise can be reached before then.
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