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Business

U.S. Billionare Set to take over Bankrupt German Media Group

One of America's most successful media entrepreneurs, Haim Saban, has seen off the competition in the battle to take over the bankrupt German KirchMedia group. His main rival, Bauer, threw in the towel on Wednesday.

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KirchMedia's film rights library in Munich contains some 13,000 feature films and 3,000 television series.

An American businessman is tipped to clinch a deal to buy up the bankrupt KirchMedia group this week. KirchMedia CEO Hans-Joachim Ziems has confirmed that negotiations with California media mogul Haim Saban are now in their final phase. He said on Wednesday all that now remained was to make Saban's bid "watertight."

Saban's bid has pushed out the Bauer Verlag, Germany's largest publisher of TV and entertainment magazines, that was the hot favorite to take over KirchMedia. Last December, managers of KirchMedia, which owns a controlling stake in broadcaster ProSiebenSat1 and Europe's largest library of film rights, agreed to sell the business to the Hamburg-based Bauer publishing group and creditor banks including Germany's HVB.

But the deal fell through after disagreement over the film-rights business and paved the way for Saban, the former owner of Fox Television and French Television Francaise 1.

Bauer -- which has a major stake in another leading broadcaster, RTL 2 -- pulled out of the bidding together with junior partner, Munich-based HypoVereinsbank, after Saban topped his offer by some €100 million ($110 million) over the weekend. Both bids were reportedly worth some €2 billion ($2.2 billion).

Bauer spokesman Andreas Fritzenkötter said on Wednesday the company was not prepared to take part in a "bidding race."

KirchMedia a lucrative draw

KirchMedia, the most lucrative leftover of the insolvent Kirch Group, not only owns Germany's most extensive film rights library with a catalogue of some 13,000 feature films and 3,000 televison series, but also has majority stake in the country's largest free-to-air television network, ProSiebenSat1.

Apparently it was the hefty price of the television operations which exceeded Bauer's willingness to pay. (However, some experts believed Bauer's stake in the RTL 2 channel could also have caused problems with Germany's monopolies commission.)

KirchMedia was regarded as the jewel in the crown of Bavarian entrepreneur Leo Kirch's business empire. The Kirch Group collapsed under a €6.5 billion debt in April 2002. Disagreements between KirchMedia and its advisers and creditors have hampered attempts to find a buyer for the company.

Saban, who is supported by France's private TV station TF1, has offered around € 2 billion for KirchMedia. The Egyptian-born 58-year-old has excellent contacts in both Germany and Hollywood and is credited with shrewd business sense. He has promised the Bavarian government to keep KirchMedia in Munich and not to cut jobs at the company -- in direct contrast to Bauer, which the service sector union ver.di says was pushing for job cuts.

A self-made media tycoon

Having started his career as a music producer in Tel Aviv, Saban moved to Paris after the 1973 Yom Kippur war. There he provided soundtracks for cartoon films and television series, finally hitting the big time with the Japanese cartoon series "Power Rangers."

He recently sold his interests in Fox Family Worldwide TV for $1.5 billion, which gave him the resources to try to break into German television. Critics, however, say the self-made tycoon left Fox with a mountain of debt and point to the fact that the Saban Capital Group, which he founded over a year ago, has no experience in investing in media companies.

If Saban's bid goes through, he will become one of Germany's most important media managers almost overnight. The board of creditors, a collection of banks and Hollywood film studios owed money by KirchMedia, have given CEO Ziems until Sunday to finalize negotiations.

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