Murdoch Bares His Teeth

Rupert Murdoch's long-term ambition of gaining a foothold in Europe's largest market could move a significant step closer today when some of Germany's most powerful figures meet to try to avert the collapse of the influential Kirch Media group.

Representatives of Mr Murdoch's News Corporation will be among creditors attending talks aimed at thrashing out a future for the loss-making Premiere pay-TV arm of Kirch. The meeting will be led by three insolvency experts, who were yesterday appointed amid growing signs of tension between Kirch and its creditors.

The plight of Premiere is at the root of Kirch's woes - and Mr Murdoch's opportunities of expansion into Germany.

He is owed €1.7bn (£1bn) by Premiere, which is losing £1.4m a day. Analysts have warned that his determination to recoup the debt could bankrupt the entire Kirch group, which is already teetering under debts of £5bn-£8bn. In an effort to avert collapse, they believe Kirch may offer Mr Murdoch control of Premiere.

German politicians are reluctant to let Mr Murdoch gain influence in their country and have talked about finding a domestic solution for a media company whose strength and breadth of assets has been likened to a business in Britain owning the Sun newspaper, all of ITV and BSkyB.

Mr Murdoch has insisted that he will not put "a penny more" into Kirch but in an email to staff, left the door open to a deal by adding the caveat "as it currently exists".

Leo Kirch, the 75-year-old tycoon who heads the eponymous company, has admitted he is ready to throw in the towel and sell a restructured Premiere to the Australian born magnate.

"If necessary, I will give him everything," Mr Kirch told Der Speigel. "So, he'll eat us up. Murdoch is a shark. Sharks have long teeth. Somebody who doesn't want to swim with sharks shouldn't be in the water."

Despite Mr Kirch's apparent candour, many analysts believe he is playing a game of bluff and trying to force the government into a last-ditch rescue deal that would keep Mr Murdoch out of Germany. News Corp insiders have long-suspected that German banks will eventually bail out Kirch.

Last week Mr Murdoch flew to Germany for a meeting with Chancellor Gerhard Schröder where, reports say, he attempted to calm the left wing leader's fears that an arch-conservative from overseas was battling to gain influence over his country's media. Both sides refused to confirm the talks or their contents.

Kirch yesterday underlined the precariousness of its position by appointing the trio of restructuring experts.

"They will be investigating the implications which the liquidity situation in the pay-TV sector may have for the group," a statement said. Analysts say one of their first acts will be to see if they can renegotiate sports rights and movie deals bought at the height of the dot.com boom and now looking over-valued.

"We must match our agreements to reality," said Georg Kofle, chief executive of Kirch's pay-tv interests.

A majority stake in the holding company that owns formula one has already been put up for sale. The restructuring experts also have to contend with publisher Axel Springer Verlag, which wants to exercise an option to sell back to Kirch a stake in broadcaster ProSiebenSat.1 for €767m.

German officials rejected US cable entrepreneur John Malone's €5.5bn bid to buy six regional cable TV networks from Deutsche Telekom.