F1

Kirch facing financial crunch

Motorsport.com - The Kirch Group is facing a financial crunch with media mogul Rupert Murdoch in a position to force the company to buy him out of Premiere, Kirch's pay TV business. Kirch owns 75 per cent of SLEC, which, in turn owns the...

Motorsport.com - The Kirch Group is facing a financial crunch with media mogul Rupert Murdoch in a position to force the company to buy him out of Premiere, Kirch's pay TV business.

Kirch owns 75 per cent of SLEC, which, in turn owns the Formula One broadcasting rights for 100 years. The Ecclestone Family Trust owns the remainder of SLEC.

Based on an earlier agreement between Kirch and Murdoch, Murdoch's British Sky Broadcasting can force Kirch to buy BSkyB's remaining stake in Premiere for approximately US$1.6 billion.

Should Murdoch force Kirch's hand, the German media giant would likely be forced to sell some assets, given its near US$5 billion in debt and over US$2 billion in contingent liabilities.

Asset sales could include some or all of Kirch's pay TV operation, or some of Kirch's shareholdings outside of Germany.

Kirch Group's control of F1 broadcasting rights, combined with its pay TV interests, has induced the European car manufacturers to set up a proposed rival series to Formula One. This series is due to debut when the current Concorde Agreement governing F1 expires in 2007.

The manufacturers, including BMW, DaimlerChrysler, FIAT and Renault, are keen to ensure that Formula One stays on free TV, rather than pay TV, in order to maximize the public exposure from their investment in F1.

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