German banks have moved in to salvage what they can from Kirch Media after the group's core business filed for insolvency yesterday, the largest corporate collapse in German post-war history.
Company administrators said they wanted to turn around and not break up the company, which has interests spanning newspaper publishing, film production and broadcast and cable television.
"This is not the end of Kirch but a turning point. Our goal now is to reconstruct the company into a new Kirch Media and lead the company back into profitability," said Mr Wolfgang Hartmann, spokesman for four German creditor banks.
A court-appointed administrator confirmed that Kirch's most valuable asset, the 2002 and 2006 World Cup television rights, had been hived off to a Swiss subsidiary.
He added that the profitable private television company ProSiebenSat1, over 50 per cent owned by Kirch Media, was unaffected by the bankruptcy application.
The Kirch-PayTV subsidiary, blamed for dragging down the company, was believed to have been saved from bankruptcy at the last minute by an as-yet unknown investor.
Investors already on-board the restructured firm include newspaper groups Axel Springer Verlag and WAZ.
The administrators did not rule out participation by foreign shareholders, including Mr Silvio Berlusconi and Mr Rupert Murdoch.
"We are not interested in running the company long term; we are looking for media companies with the necessary competencies," said Mr Wolfgang van Betteray, the creditor-appointed administrator of KirchMedia.
Despite the upbeat outlook, the creditor banks admitted they were not certain how deeply indebted Kirch Media actually was. "We are not sure, but it will not be a small figure, most likely a four-figure million amount," said Mr Hartmann.
With at least €6.5 billion in debt, the company's largest single creditor is the Bavarian State Bank, which granted Kirch at least €1.9 billion in soft loans.
This could have political consequences for the Bavarian prime minister Mr Edmund Stoiber.
He will face questions in the Bavarian state parliament tomorrow about his role in securing the loans.
Chancellor Gerhard Schröder yesterday attacked the economic prowess of Mr Stoiber, his conservative challenger in September's general election.
"What happened there was, in economic and political terms, highly questionable. Credit flowed without security being secured. It's not a sign of economic competence, quite the opposite," he said.
He said the federal government would do all it could to save the jobs of 10,000 KirchMedia employees.
