German Forces Unite to Take Over Kirch

German banks and media groups have begun talks on a plan to take control of media mogul Leo Kirch's core business once it is placed in administration, banking sources said on Saturday.

KirchMedia, the core television and rights unit, is expected to file for insolvency early on Monday, the sources said.

At a news conference later that day, creditor banks will outline the plan of a so-called "German solution" which appears to leave rivals Rupert Murdoch and Silvio Berlusconi empty handed for now.

"It is about an orderly insolvency which ensures the restructuring and survival of KirchMedia assets," one source said.

The banking sources said creditor banks would provide additional short-term equity capital and publishing groups Axel Springer and WAZ had indicated initial interest in the idea, but sources stressed talks were still at an early stage.

"We have already talked to the WAZ Group and media house Springer, which have voiced their interest in principle," the sources said.

National Solution Preferred

Axel Springer Verlag declined to comment while the WAZ group was not immediately available for comment.

Media sources confirmed, however, that at least Springer - publisher of Germany's biggest selling tabloid Bild - was interested in playing a strategic role in the yet to be set up successor group to KirchMedia.

In recent past, minority KirchMedia shareholders Rupert Murdoch's News Corp. and Mediaset, controlled by Italian Prime Minister Berlusconi, had been widely tipped to take a controlling stake in the floundering group.

German politicians have frequently voiced reservations over a strong role for Murdoch and Berlusconi in the country's media sector.

A banking representative said banks did not rule out reopening talks with those two parties further down the road, but that for now they preferred a national solution.

"We do not exclude talks with those two parties as well, but as part of an insolvency filing they would take place under different conditions," said one.

Creditor banks Bayern LB, Commerzbank, DZ Bank and HVB Group had stressed in the past that they did not want to assume an operative role in a media house and were thus keen to find media savvy investment partners, the sources said.

In coming weeks the focus will be on rescuing Kirch assets, which includes Germany's biggest commercial broadcaster ProSiebenSat.1, together with the administrator and winning new equity capital, they said.

Details on sharing the burden between banks and investors and on which units of Kirch will be kept and which will be sold or liquidated have not been worked out yet.

Talks in Munich and Los Angeles between creditors and investors to agree on a rescue plan for Kirch, weighed down by a 6.5 billion euros debt pile, failed on Friday.

Soccer TV Rights to Stay with Leo Kirch?

Separately, German magazine Der Spiegel reported that Leo Kirch and his deputy Dieter Hahn had secured for themselves the TV rights to the soccer world championships in 2002 and 2006.

Hahn had negotiated the deal with Joseph Blatter, president fo the world soccer federation FIFA, before Easter, Der Spiegel reported ahead of publication on Saturday.

The TV rights are planned to be transferred to the KirchSport unit in the Swiss town of Zug and the banks have agreed to the plan, the report said.

The TV rights are regarded as one of the most profitable assets of Kirch Group and still a week ago banking representatives called Kirch's claim to parts of those rights overblown.