Hahn steps down as Sky director over Kirch crisis

The crisis at Kirch, the debt-laden German media group, appeared to be coming to a head yesterday after it emerged that BSkyB was close to a decision on its stake in the business and the German establishment was moving to keep the satellite broadcaster out.

Dieter Hahn, the managing director of Kirch, abruptly stepped down as a director of Sky. It is understood this was because the Sky board is now determining what to do with its 22 per cent stake in Premiere, the Kirch pay-TV business. Kirch last night said that it would seek talks with Sky in the coming weeks.

Sky, which is chaired by Rupert Murdoch, has a put option that entitles it to sell its Kirch stake back to the company from October, for more than €2bn (£1.2bn). The trouble is that Kirch is already labouring under debt of more than €5bn and faltering performance at some of its businesses.

"There was a conflict of interest. It was not appropriate for Dieter Hahn to be there while the Sky board was making a decision on the Kirch stake," one industry source said.

Although Mr Murdoch's preference is said to be to simply get his money from Kirch, Sky acknowledged late last year that the German company probably could not afford to pay. Instead, it is believed that Sky is seeking to get control of Premiere, which comes with 2 million pay-TV customers in Germany and a rare opportunity to make a sizeable entry into Europe's biggest TV market.

Kirch is currently trying to merge its KirchMedia business with ProSiebenSat.1, a publicly quoted free-to-air TV business. The merger documents will be published in the next few weeks with the deal due to go ahead in June.

"Kirch is under pressure to proceed with this merger, which will solve a number of problems. It can ill-afford problems elsewhere while it gets this away. That is why Murdoch is moving now," said the source.

However, the prospect of Mr Murdoch grabbing an influential position in Germany has alarmed business and politicians in the country. Reports emerged yesterday that Thomas Middelhoff, the chief executive of Bertelsmann, the other big German TV operation, had met the German Chancellor Gerhard Schröder, before and after Christmas, to discuss the liquidity crunch at Kirch. Bertelsmann is said to be concerned that the entry of the highly aggressive Sky would upset the delicate ecology of the German market.