Kirch Media
- 1. A Case study on Major Corporate Governance Failure KIRCH GROUP (GERMANY)
- 3. A Brief Timeline of LEO KIRCH 1926 Born in Volkach, son of a winemaker 195 2 Graduated from the University of Munich. Studied Marketing, Management and Mathematics. 1956 Purchased the German Right’s for the classic Italian movie “La strada” . 1980 s Started assembling Television Properties
- 4. A Brief Timeline of LEO KIRCH 1990s Sets up the subscription television service Premiere. Becomes key player in sports broadcasting rights 199 6 Owned a stake in the publisher of Germany’s best selling tabloid Bild Zeitung. 2002 2006 Owns rights for broadcasting FIFA world cups 2011 Dies in Munich aged 84
- 5. KIRCH GROUP Kirch Gruppe (Kirch Group) was a German media group founded by Leo Kirch. The group collapsed in 2002 largely due to the debts associated with the purchase of sports rights for its television channels and the launch of pay-TV services. The holding company for the group was Taurus Holding which had three major subsidiaries, 1) Kirch Media 2) Kirch Pay-TV 3) Kirch Beteiligung
- 7. KIRCH MEDIA a. b. c. d. e. Kirch Media's main assets were Kirch Sport, which held the TV rights to the World Cup and other sports; 52.5% of ProSiebenSat.1 Media, an owner of main satellite channels; the DSF sports channel; Taurus Produktion, a film and TV production group; and Taurus Lizenz, owner of fiction and media medium rights Kirch Media was declared insolvent on 8 April 2002
- 8. Kirch Pay-TV Kirch Pay-TV was majority owned by Taurus Holding, however BSkyB held 22% along with Lehman Brothers (2.4%) and Saudi Prince AlWaleed (3.12%). The company's main asset was the Premiere pay-TV network. Kirch Pay-TV filed for bankruptcy on 8 May 2002.
- 9. Kirch Beteiligung Kirch Beteiligung's main assets were its majority share of Formula One's commercial rights (through Speed Investments) and its 40.33% stake in the media company, Axel Springer AG Kirch Beteiligung filed for insolvency on 12 June 2002, along with the Taurus Holding parent company of the Kirch Group
- 10. Reasons For The Collapse Of Kirch Group Heavy Debt -The group purchased firm rights at high costs and misjudged entry into pay television, as a result debt burden mounted to 6.5 billion euros. Over Expansion -Leo Kirch’s lust for power led to rapid expansion without proper strategic planning.
- 11. Lack Of Transparency -As the CEO, Kirch operated his business empire with a high degree of secrecy and opacity. Audit Failure - KMPG, the group’s external auditor did not make proper assessment of the debts. Regulators’ Complicity -The state government forced the state owned banks to give loans to the already highly indebted Kirch Group.
- 12. Deutsche Bank AG (DBK) was found partially liable over the collapse of Leo Kirch’s media group and must pay damages. Massive Borrowings - It continued to borrow despite a growing debt burden and weak financial position.
- 13. THANK YOU !!!