German media group Kirch filed for insolvency this morning.
Kirch ran out of cash after amassing debts of at least €6.5 billion through costly film rights deals and a misjudged foray into pay-TV. Insolvency, similar to Chapter 11 bankruptcy protection in the United States, places the company in the hands of an administrator.
The move could trigger a takeover by German banks and publishers and keep aggressive foreign rivals out, a leading German politician said. Mr Wolfgang Clement said Kirch had made a court filing for insolvency and that an administrator would try to salvage as much of the group as possible.
Media mogul Mr Leo Kirch spent almost half a century building up a group spanning KirchMedia, the rights and television operation that controls Germany's biggest commercial broadcaster and the broadcast rights to Formula One racing.
Another arm of the Kirch empire is Kirch Beteiligung GmbH, which owns 40 per cent of Bildnewspaper publisher Axel Springer.
Kirch's main creditors - Bayern LB, HVB Group, DZ Bank and Commerzbank - had sounded out Springer about a German solution that would prevent News Corp.'s Mr Rupert Murdoch or Mediaset, controlled by Italian prime minister Mr Silvio Berlusconi, from gaining control of Kirch.