kirch media

13
KIRCH GROUP (GERMANY) A Case study on Major Corporate Governance Failure

Upload: stacy-chacko

Post on 20-Aug-2015

1.219 views

Category:

Business


0 download

TRANSCRIPT

Page 1: Kirch Media

KIRCH GROUP(GERMANY)

A Case study on Major Corporate Governance Failure

Page 2: Kirch Media

Founder Of Kirch Group

Leo Kirch1926 - 2011

Page 3: Kirch Media

A Brief Timeline of LEO KIRCH

1926 Born in Volkach, son of a winemaker

1952

Graduated from the University of Munich.Studied Marketing, Management and Mathematics.

1956

1980s

Started assembling Television Properties

Purchased the German Right’s for the classic Italian movie “La strada” .

Page 4: Kirch Media

A Brief Timeline of LEO KIRCH

Sets up the subscription television service Premiere.Becomes key player in sports broadcasting rights199

6Owned a stake in the publisher of Germany’s best selling tabloid Bild Zeitung.

200220062011 Dies in Munich aged 84

Owns rights for broadcasting FIFA world cups

1990s

Page 5: Kirch Media

KIRCH GROUPKirch 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 Media2) Kirch Pay-TV 3) Kirch Beteiligung

Page 6: Kirch Media
Page 7: Kirch Media

KIRCH MEDIA Kirch Media's main assets were a.Kirch Sport, which held the TV

rights to the World Cup and other sports;

b.52.5% of ProSiebenSat.1 Media, an owner of main satellite channels;

c.the DSF sports channel; d.Taurus Produktion, a film and TV

production group; and e.Taurus Lizenz, owner of fiction

and media medium rights

Kirch Media was declared insolvent on 8 April 2002

Page 8: Kirch Media

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 Al-Waleed (3.12%). The company's main asset was the Premiere pay-TV network.

Kirch Pay-TV filed for bankruptcy on 8 May 2002.

Page 9: Kirch Media

Kirch BeteiligungKirch 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

Page 10: Kirch Media

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.

Page 11: Kirch Media

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.

Page 12: Kirch Media

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.

Page 13: Kirch Media

THANK YOU !!!