Kirch and Murdoch talking deals over Premiere

THE Kirch Group, the German media company which controls the company which holds the commercial rights for Formula 1 racing, has been struggling for cash in recent months and that has led to all kinds of rumors about the role of the firm in the sport. While seemingly a massive business for those involved, Formula 1 is only a small corner of the Kirch empire and for the moment at least is not losing money. There are debts to be paid but F1 is not dropping millions like some of Kirch's pay-per-view TV stations. Thus F1 is not a priority.

Other debts need to be serviced and the banks are balking and so Kirch has been looking at more inventive ways of solving his problems, largely by convincing his creditors that they should allow him to delay payment in exchange for management control and so on.

Kirch's biggest fear is that an even bigger media company will come charging in and engineer a hostile takeover of parts of his empire. This is possible - and will probably explain why Kirch is talking to Rupert Murdoch about a deal to allow Murdoch to run the Premiere TV channel if he allows Kirch a little leeway on a "put" option which Murdoch has on shares in Premiere. This option could force Kirch to pay more than a billion dollars to buy out Murdoch's share in Premiere - a move which could bring the Kirch financial structure crashing down.

Small wonder that Kirch is not doing much in F1 circles...

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