Debt-ridden media mogul Leo Kirch finally filed insolvency proceedings for the KirchMedia division of his KirchGroup empire yesterday morning (April 8).

A provisional insolvency administrator Dr. Michael Jaffe was appointed by the Munich administrative court. Shortly after, consultants Wolfgang van Betteray and Hans-Joachim Ziems were named as a "turnaround management" team to handle an "insolvency in self-administration" of KirchMedia. The pair, which have been working inside Kirch for the last month, quickly announced changes to KirchGroup's future policy on film rights buying with the US majors.

While revealing that KirchMedia owed Euros1.4bn to the banks and some Euro500m to the major studios for the payment of film rights, Ziems said that there would be a strict division made between the acquisition activities for free and pay-TV rights. "In future, when Premiere need rights they will have to acquire the film licenses directly from the licensor and no longer through KirchMedia". It was notable that KirchPayTV, the division which runs the ailing Premiereworld operation, was not part of yesterday's insolvency filings.

"Premiere will of course have the possibility of using the rights [held at KirchMedia] when they are paid for", van Betteray said. "But there will be no more 'sponsoring' like in the past". This "cross subsidising," between different parts of the Kirch empire had generated some Euro800m of losses for KirchMedia.

Van Betteray said they were already engaged in "advanced discussions" with one studio in particular over the issue of an output deal struck between 1996-1998. With other studios, they said they were confident of "coming to sensible solutions in a clear time frame".

Commenting on his and Ziem's task over the next two to three months, van Betteray said that "the goal is to continue the business in a controlled form and preserve the essential parts through appropriate restructuring". They will work in close collaboration with insolvency administrator Jaffe and also draw on the knowhow of the existing KirchMedia management to find the best investors for a new revamped KirchMedia.

The fact that the company has moved into administration, rather than being rescued by its minority shareholders, which include News Corp, Mediaset and Kingdom Holdings, does not rule out the possibility that a foreign company will become a major player in the German TV scene. But it does appear to make a "German solution" more likely.

Meanwhile, EM.TV and ProSiebenSAT.1 Media both played down the effects that the insolvency would now have on their operations. In a statement, EM.TV said that the effects would "remain limited even in a worst case scenario". The running of the Junior.TV joint venture would not be impeded and that no more than Euros11m in revenues would be lost if Premiere were to close down.

Although the free-TV companies ProSieben, SAT1, Kabel 1 and N-24 are majority owned by KirchMedia, board chairman Urs Rohner insisted that they would remain independent. "ProSieben.SAT.1 Media AG is autonomous and financed independently of the KirchGroup and has been a profitable company for some time", he said. "For the business, the financing and the viewers of ProSiebenSAT.1, there is absolutely no change".