Leo Kirch, German Entrepreneur, Dies at 84

Leo Kirch, who turned his one-man film distributor into Germany’s second-biggest media business before losing control of it after a gamble on pay television, has died. He was 84.

No cause of death was given in a statement by his family today. Kirch had suffered from diabetes and near-blindness for several years.

“We are very sad,” Dieter Hahn, who has worked with Kirch for almost 20 years, said in the statement distributed on behalf of Kirch’s family. Kirch died “today peacefully, surrounded by family.”

At its height, his Kirch Holding GmbH was valued at $5 billion. Its 150 units held Germany’s biggest film-licensing library, the nation’s only pay-television channel and rights to two soccer World Cup tournaments. When Kirch resigned, his companies were under court protection from creditors, the biggest bankruptcy filing in Germany since World War II.

In a letter of farewell to his staff on April 8, 2002, Kirch said “people, not numbers make companies.” He ended the letter, mailed the day that the main KirchMedia GmbH unit sought protection from creditors, with “God bless you.”

In the last decade of his life, Kirch filed dozens of lawsuits against Deutsche Bank AG (DBK) and the lender’s former Chief Executive Officer Rolf Breuer. The disputes followed a February 2002 Bloomberg TV interview in which Breuer said “everything that you can read and hear about (Kirch) is that the financial sector isn’t prepared to provide further” financing.

Suits Halted

Kirch claimed Breuer’s comments precipitated his group’s bankruptcy. Deutsche Bank and Breuer have denied wrongdoing.

Under German rules of civil procedure, a suit is halted until the heirs resume the case. Kirch didn’t file all of the suits in his own name and some were filed together with his wife Ruth.

An action seeking about 2 billion euros ($2.84 billion) in damages against Deutsche Bank, currently pending at a Munich appeals court, was filed by a company set up by Kirch for the litigation. That suit can continue unaltered.

As divided Germany began to rebuild after World War II, Wuerzburg, Bavaria-born Kirch was in his twenties and looking to make money by exploiting his business administration education and his interest in movies.

Taking time off from teaching economics at Munich University in 1956, Kirch drove to Italy in his Volkswagen in search of film makers. He found Federico Fellini, who had just directed his first and still one of his best-known films, “La Strada.” Kirch bought the German rights to distribute the movie, borrowing the money from his wife, Ruth.

La Strada

It was a gamble that paid off. “La Strada” was popular with German audiences and ultimately considered a classic, so that royalties rolled in for years. Plowing his gains back into the business, Kirch bought the rights to more movies, became one of Germany’s biggest programming traders and began co-producing films with foreign partners.

Kirch, the son of grape growers, also loved classical music and became a close friend of Herbert von Karajan, long-time director of the Berlin Philharmonic.

As television expanded in Germany in the 1960s, Kirch had the programs it needed. Germany’s public channels ARD and ZDF depended on him almost completely for drama series and shows imported from U.S. networks. By the end of the century, he owned the rights to 63,000 movies and television shows, as well as sports broadcasting rights.

Television Monopoly

When the government gave up its monopoly on television in 1984, Kirch saw another opportunity. He was one of the founders of the first channel to depend on commercials, Sat.1. The channel became part of Germany’s biggest private TV broadcaster after merging with ProSieben Media AG in 2000, now known as ProSiebenSat.1 Media AG. (PSM)

In 1996, Kirch began pouring money into a new venture: pay TV. In four years he spent more than $3 billion building Premiere World, his flagship pay-TV channel.

The endeavor didn’t pay off. German viewers who already had a wide choice of channels, many free, didn’t feel the need to pay for what Premiere World had to offer. Attempts to restrict some sports competitions to pay TV, including parts of the soccer World Cup, failed to attract enough viewers.

“As an outstanding media entrepreneur and visionary, Leo Kirch shaped the German film and television landscape deeply,” Bernd Neumann, German cultural minister, said in an e-mailed statement. “His business actions, which weren’t without risks, have always been characterized by a huge passion for film.”

Throughout his career, Kirch borrowed from banks to fund investments. The banks that helped him grow finally turned against him and forced him to abandon the business he built.

To contact the reporters on this story: Karin Matussek in Berlin at kmatussek@bloomberg.net; Benedikt Kammel in Berlin at bkammel@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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