Key KirchMedia assets

KirchSport: TV rights to World Cup and other sports ProSiebenSat 1: Sat 1, ProSieben, Kabel 1, N24 cable channels DSF sports channel Taurus Produktion: Film and TV production units Taurus Lizenz and others: Fiction and media rights

The German media giant owns the broadcast rights to the football World Cup and Formula 1 motor racing, and its collapse puts thousands of jobs - and a string of television channels - at stake.

Mr Schroeder said his government would be prepared to intervene to help save jobs at Kirch if requested by the insolvency administrator.

He said that, with 10,000 jobs at risk, an intervention was entirely justifiable.

Mr Schroeder also hinted that he was not against foreign participation in Kirch, according to a report in the Financial Times.

"I wouldn't have any objections if someone like Rupert Murdoch gets involved in pay-TV in Germany," he added.

A rescue proposal from investors including media tycoon Rupert Murdoch and Italian Prime Minister Silvio Berlusconi broke down last week.

Red faces

The collapse of Kirch is an embarrassment to the Chancellor, underlining the weakness of the German economy and high unemployment in election year.

But it also spells trouble for Edmund Stoiber, Bavarian premier, personal friend of the group's founder, Leo Kirch, and conservative challenger to Chancellor Gerhard Schroeder.

Most of Kirch's employment is in Bavaria, and the loss of the jobs could hit the reputation for turning the Bavarian economy around which is his main stock in trade.

Mr Stoiber is now backing away from signals that the group could be rescued by German banks and publishers, keeping aggressive foreign rivals outs.

He has already been criticised for the 1.9bn euros loaned on soft terms to Kirch by the Bayerische Landesbank, the group's biggest creditor. The bank is part-controlled by the Bavarian government.

World Cup salvaged

Although Kirch Group, as a privately held company, does not publish accounts, it is thought to be at least 6.5bn euros (�4bn; $5.7bn) in debt.

The heavy debts are the result of costly film rights deals and a misjudged foray into pay-television.

However, most of Kirch's lucrative sports rights and other assets, including the World Cup, Formula One racing and its stake in the popular tabloid Bild, are held by other subsidiaries, keeping them well away from the claws of creditors and administrators.

Kirch Media and its dozens of subsidiaries are vital pieces in the complex structure of the Kirch empire.

And it is increasingly likely that Taurus, the holding company that groups Kirch's web of companies, could also be declared insolvent.

Economic gloom

The insolvency of KirchMedia is yet another blow for German business, which has suffered the failure of a string of well-known corporate names in recent months, including construction firm Holzmann and stationer Herlitz.

There were 32,000 insolvencies in Germany in 2001, 14% more than the year before.

Experts believe the number could rise to 40,000 this year.