Murdoch 'out of race for Kirch'

Rupert Murdoch's News Corporation is out of the race to buy the core business of Leo Kirch's failed media empire, according to a report yesterday in the German news magazine Der Spiegel.

The magazine, which cited sources close to the negotiations, offered no reason for News Corp's supposed withdrawal. It said that the Berlusconi family's Mediaset group had also pulled out of the auction.

Der Spiegel said the decision had been taken by the Italian prime minister Silvio Berlusconi himself, on the grounds that a continued Mediaset involvement would be too politically sensitive.

Earlier this year, the German chancellor, Gerhard Schröder, warned that the sale of a key media concern to the family of the head of a foreign government could have far-reaching diplomatic consequences.

Mediaset and News Corp had formed part of a consortium bidding for KirchMedia, the Kirch subsidiary that controls three of Germany's main commercial television channels as well as the bankrupt group's film and sports broadcasting rights.

Der Spiegel said that the consortium, which groups together existing minority shareholders in KirchMedia, was nevertheless still in the running. The other members are understood to be investment bank Lehman Brothers, the German retailer Rewe and the Saudi prince Walid's Kingdom Holdings.

The report said the consortium had bid €2.5bn (£1.9bn) for KirchMedia's assets.

It was one of three consortiums put on a shortlist by the administrators and allowed a detailed look at KirchMedia's accounts, Der Spiegel reported.

The other consortiums are an alliance between the US film producer Haim Saban and the French broadcasting group TF1, which had bid €2.6bn, and a consortium that brought together Germany's Commerzbank and the Hollywood studio Columbia TriStar, which had offered €2.3bn.

Among the groups eliminated from the race was an all-German consortium including Hypovereinsbank, and two leading publishing houses, Axel Springer and Heinrich Bauer. Der Spiegel's owners also had an interest in this bid.

The magazine said, however, that the consortiums remained open, and that some could take in new partners before a deal is struck. The administrators have said they intend to decide on a buyer for KirchMedia by the end of the month.