Kirch back in game: $5 bil deal
EmptyThey don't call Leo Kirch the comeback kid for nothing.
The octogenarian and former media mogul stormed back onto the scene Tuesday with a spectacular $4.9 billion deal to market the rights to Germany's premier soccer league, the Bundesliga.
In a move that surprised even industry insiders, Kirch's KF 15 agency signed a deal with the German Soccer League, the DFL, to sell Bundesliga rights for the 2009-2015 seasons. KF 15 subsidiary Sirius will market the rights, selling them to German free- and pay TV channels.
The DFL and Sirius also will set up a joint venture to produce live broadcasts of Bundesliga matches. Sirius will hold 51% of the production company, with the DFL controlling 49%.
Kirch has agreed to pay the DFL €500 million ($705 million) a season, or a total of €3 billion ($4.2 billion), to market the German rights to Bundesliga matches. Under its current deal with German cable group Unity Media, the DFL receives €440 million ($620 million) per season. The DFL said it expects an additional €460 million ($649 million) over the six-year period from international sales of Bundesliga rights, bringing the total value of the deal to slightly less than $5 billion.
For Kirch, the deal is a return to the spotlight he left following the dramatic collapse of his German empire KirchMedia in 2002.
It also marks the return of Dieter Hahn, the former deputy head of KirchMedia, who will be running the new Kirch-driven business.
It is still too early to tell how Kirch's return will play out in the sports-rights market. The Bundesliga is the single most important driver of the German pay TV business, as well as a major draw on German free-to-air.
"It's a surprise, that's for sure," said Hans Seger, head of programming at leading German pay TV channel Premiere, on Kirch's return. "But for us, it doesn't change much. Whether we are negotiating with the DFL directly or with this new agency Sirius, our position regarding prices and exclusivity remains unchanged."
The market has been buzzing with rumors of a Kirch comeback following a deal two weeks ago that gave Kirch's KF 15 de facto control of sports rights group EM.Sport Media (formerly EM.TV).
The fact that the new Kirch-Hahn company will be dealing with sports rights and not studio films will likely come as a relief to many Hollywood executives.
Although Kirch funneled piles of cash Hollywood's way over the years through huge output deals, the KirchMedia collapse cost the studios billions.
"Oh boy. Ah … no comment," said a bemused Gary Marenzi, co-president of worldwide television at MGM, when asked about the Kirch comeback.