Saturday, 16 July 2011

Leo Kirch

Leo Kirch
Kirch in Munich during his court case against Deutsche Bank, March 2011.
Leo Kirch, who has died aged 84, was one of Germany's most powerful business figures and the architect of a vast but troubled media empire that in 2002 was involved in his country's biggest postwar bankruptcy. The consequent battle with Deutsche Bank is still being fought in the German courts.
Sometimes compared with Rupert Murdoch, with whom he competed and also did business, Kirch associated with the Italian prime minister, Silvio Berlusconi, and was a close personal friend of the former German chancellor Helmut Kohl, to whose financially embarrassed CDU party he made a record donation of one million Deutsche Marks (€500,000) in 2000, after a major funding scandal.
Born and raised in the Würzburg area of Bavaria, Kirch was conscripted into a Luftwaffe anti-aircraft unit in 1943, at the age of 17. He deserted just before the end of the war in 1945, caught up with his interrupted studies and read mathematics and physics at Würzburg University, from which he was expelled in 1950, apparently for losing interest in his studies. He moved on to Munich University, where he married a fellow student, Ruth Wiegand, in 1954, and gained a doctorate in 1958.
But he had laid the foundation of his business success two years earlier, when he borrowed money from his wife's family and went to Italy to buy a print of Federico Fellini's film La Strada, which he brought back to Germany with exclusive German rights to show the film. With the considerable profits from this and similar licences, he rapidly founded a series of film-rights companies, acquiring an exclusive contract to supply ZDF, Germany's second state-owned television channel, with Hollywood and other foreign films, a deal which lasted for many years and brought in huge revenues. He owned the largest film archive outside America.
But ZDF dropped Kirch when commercial television arrived in Germany and ARD, the country's first state channel, signed a long-term Hollywood film rights contract, which included access to the James Bond franchise. Kirch switched to supplying the new channels, while ZDF stopped showing foreign films. Kirch sued ARD and won back the rights to some of the films in its American package, including Gone with the Wind.
In 1997 the always-reclusive Kirch negotiated a new deal on US films and invested heavily in the new phenomenon of German pay-TV. About two years earlier, he had founded the pay channel DF1, now known as Sky Deutschland (in which Murdoch has a 49.9% stake). Kirch concluded a deal with the German football Bundesliga, comparable with Murdoch's contract with the English Premier League, whereupon astronomical payments to the clubs for TV rights led to inflated wages for the players. An attempt to sell the Bundesliga rights for €3bn was scuppered by the federal anti-monopoly authorities in September 2008.
Unlike some of the country's neighbours, Germany proved stubbornly resistant to the lure of pay-TV because several new but free-to-air channels were showing foreign films at or near the same times. It proved all too easy to circumvent the decoder box required for "pay per view" programmes, and many thousands of viewers thus paid nothing. In 2002 the over-investment in pay-TV led to an accumulated debt of about €6.5bn and KirchMedia applied for bankrupt status. Kirch accused Berlusconi and Murdoch of circling like sharks hoping for pickings from the wreckage. Both men's companies had already acquired minority stakes in Kirch companies.
It was only in 1985 that the Kirch conglomerate had taken an interest in print media, buying a 10% stake in the Axel Springer company, publisher of Bild, Germany's most popular and sensational newspaper, as well as Die Welt and other publications. But this was little more than a sideshow for Kirch. Though badly wounded by the insolvency, other parts of the empire survived and made something of a comeback in 2007. Kirch had by then almost completely lost his sight and had a foot amputated as a result of diabetes.
After the bankruptcy, the conglomerate sued the Deutsche Bank chairman Rolf Breuer, claiming that he had helped to bring it about when he remarked in a TV interview that the financial sector was no longer willing to extend credit to Kirch. Breuer resigned in 2006. In 2007 Kirch demanded €1.6bn from Deutsche Bank, and was later awarded partial compensation of €775m, which the bank is contesting. Meanwhile, the courts are dealing with a charge of perjury against Breuer for allegedly lying in the damages action. If convicted, he could be heavily fined or sent to prison for up to five years.
Kirch is survived by Ruth and their son, Thomas.

• Leo Kirch, businessman, born 21 October 1926; died 14 July 2011

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