The beleaguered media mogul blames long-standing rival Axel Springer Verlag for setting off the chain of events that brought down his empire.
Leo Kirch - his media empire is crumbling, but he's still fighting
Media mogul Leo Kirch on Wednesday moved to take action against long-standing rival Axel Springer Verlag by seeking an independent investigation into a controversial put option that Springer insisted on exercising in a move that Kirch blames for causing the collapse of his empire.
Kirch, who holds a 40 % stake in Springer, also asked shareholders at Springer’s annual general meeting on Wednesday to support a claim for damages against Springer’s management board and its main shareholder, Friede Springer.
The move is the latest episode in a rivalry that goes back to the 1980s when Friede Springer fought a long battle with Leo Kirch for control of the Springer group, created by her late husband Axel.
Kirch, whose empire is now almost completely insolvent, wants an investigation of a 767 million euro put option on shares in broadcaster ProSiebenSat.1 Media – part of Kirch Media – that Springer exercised against Kirch in January. The move is widely regarded as having triggered the eventual collapse of the Kirch empire.
Leo Kirch believes that the action was taken to force him to sell his stake in Springer and rid Friede Springer of an uncomfortable minority shareholder. "The board acted in the interests of the main shareholder, Friede Springer, but not in the interests of the company and other shareholders," Kirch lawyer Ronald Frohne told the annual general shareholders' meeting.
Frohne presented shareholders with a motion to force Springer to sue its own board and its main shareholder Friede Springer for damages incurred when it invoked a little-used clause in share law and went ahead and exercised the put option instead of accepting alternative proposals.
He said the board had rejected an offer by Kirch to swap the put option for a bigger stake in ProSieben, which would have given it a 100 million euro book profit instead of a 767 million euro claim rendered almost worthless after Kirch's insolvency.
Springer’s chief executive, Mathias Döpfner, rejected the argument that it had deliberately driven Kirch into the ground. "Axel Springer Verlag had no interest in weakening Kirch Group," he said. "After lengthy negotiations failed to find an alternative solution, we had to exercise the put option."
Leo Kirch is the second largest shareholder in Springer, behind founder Axel Springer's heirs, who hold just over 50%. Leo Kirch is currently trying to sell his Springer shares to repay a 720 million euro loan to Deutsche Bank secured by the stake.
Springer has teamed up with privately held Heinrich Bauer publishing group to consider a bid for the assets of Kirch's media rights group KirchMedia, the unit that controls ProSieben. Döpfner said a decision on a bid would be taken in the coming months.