ABSTRACT
Over a 46-year period Leo Kirch created a media empire, the KirchGruppe, built around films, television, football and Formula 1. With a reputation for opaque accounting, but able to lean on influential German businesspeople and politicians to assist it through hard times, the KirchGruppe appeared to be impervious to economic downturns and, as of early 2002, the companies involved employed a total of 10,000 people and had a combined turnover of more than € 6 billion. However, within a remarkably short period of time thereafter, all of the holding companies of the KirchGruppe were declared to be insolvent. Although this case study demonstrates that the behaviour of the KirchGruppe was closely tied in with the long-standing and excessively protective 'German' way of doing business,^ which undoubtedly had the consequence that the KirchGruppe's deep-rooted problems were kept away from the public gaze and left unremedied until it was too late to save the company, the fact remains that strategic errors were made and risks undertaken - and not only by the KirchGruppe itself - on a scale that would have brought down any equivalent organization trying to trade through a prolonged recession.^
Background
The KirchGruppe structure evolved to become extremely complex. Hence, it is helpful as a starting point for the purposes of the analysis that follows to divide the KirchGruppe into a small number of separate businesses.
