APRIL 23, 2002
THE Kirch house of cards seems to be on the verge of final collapse with the latest word from Germany being that the German media group's holding company Taurus Holding GmbH is on the verge of filing for insolvency. If this happens it is almost certain that the other parts of the group, notably Kirch PayTV and Kirch Beteiligung, will have to follow suit. These two companies are important to the Formula One group because Kirch PayTV is a major contributor to the coffers of the company and Kirch Beteiligung is the company which owns the shares in SLEC, the Formula One group's holding company. This will mean that both firms will come under the control of a court-appointed administrator who will then try to figure out how to use them best to pay off the outstanding debts. If this happens the banks who are trying to get control of SLEC from Kirch will have to start negotiations all over again.
The latest suggestion is that rival media empire Bertelsmann is interested in buying Kirch PayTV. This is not likely to happen until after the company becomes insolvent and the full extent of the debts become apparent. Such a move would not be good news for F1 as Bertelsmann is the owner of the free-to-air RTL station which owns the rights to broadcast F1 in Germany. RTL is unlikely to want to continue to pay the Formula One group to compete against itself and as there is only one pay-TV station in Germany there is no option to sell the rights to someone else.
It is becoming increasingly clear that the Formula One group of companies now needs to change its strategy and rather than keeping the best TV coverage for its pay-TV clients it is going to have to look at producing the best possible show for all the free-to-air stations around the world and make as much money as possible from them. At the moment there is considerable discontent amongst the free-to-air broadcasters who complain that the best in-car footage, interviews and extras go to the pay-TV service.
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