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Business

Media Fat Cats Doing Battle

Rupert Murdoch announced Thursday he plans to walk away from Kirch Gruppe, seeking to get his money back from the debt-laden German media giant. The move could bankrupt Kirch's media empire.

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Murdoch circles stricken Kirch

Leo Kirch has hardly been a likeable media mogul.

Germany has a long and rich public broadcasting tradition. Only recently, public service television viewers have seen the Premier football games disappear from their screens, after Kirch bought up the rights to the games and required viewers to pay if they wanted to watch live broadcast football.

Instead German viewers now get the handball world championships at prime time.

The best movies are also in commercial hands, showing on mostly Kirch cable channels. Other channels have filled the slots with a staple diet of shows and soaps.

Quality has given way to quantity - it is hard to see how the public are any better off. Kirch’s cheap and cheerful channels are financed through advertising or subscriptions from his pay TV channel Premiere.

The German public, however, are also forced to fork out a licence fee for their public service coverage, which amounts to about 200 euro a year.

Help from unexpected places

The public is disgruntled. Yet some big players in Germany are now backing the man who many believe brought these changes about with little else in mind than to be the biggest fattest cat of them all.

If the current crisis doesn’t bring him down, the only reason will be that Germany’s financial, media and political elite bring some heavy clout to bear to save his media empire from falling into the wrong hands.

Some, like Rolf Breuer, head of Deutsche Bank, are making life difficult for him. "Under the current circumstances", he is not willing to extend further lines of credit to him, Breuer said recently.

But at the same time, Breuer and other bankers appear to be working on a soft landing scenario.

There are many parties interested in various bits of Kirch’s media empire. Bertelsmann wants the home-shopping channel. Daimler-Chrysler and BMW are toying with the purchase of Kirch’s Formula 1 racing rights. And Rupert Murdoch wants the lot.

Who's afraid of the big, bad Murdoch?

Murdoch is the man they most want to keep out of the German media market. He is seen as an aggressive global operator, who has bought into TV and newspapers everywhere and sometimes meddles in elections.

When Tony Blair’s New Labour came to power in the UK, Murdoch’s Sun newspaper ran a headline saying "It’s the Sun wot won it".

Murdoch now seems to be cutting his losses with Kirch. The media mogul said he has in effect decided to sever commercial ties with the German by asking Kirch to buy back his share of Premier, worth an estimated 1.7 billion euro.

"I do not see how we can continue with the relationship without putting more money into it and that is something we are not prepared to do," he said.

Murdoch's move means Kirch’s media empire is likely to shrink considerably even if things go well and he gets a last minute hand to save his core business.

"A cat has seven lives, but it doesn’t have eight." the Sueddeutsche Zeitung newspaper quoted an insider as saying.

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