On Monday, Kirch declared its TV rights unit KirchMedia bankrupt after rescue talks involving Murdoch and Italian premier Silvio Berlusconi failed. It had been expected that KirchPay-TV would be the next unit to go.
It is crucial for Murdoch to rescue the pay-TV business, which owns Germany's only pay-TV channel, Premiere World, because if he fails it would close the door on his ambitions to gain a foothold in the German market.
News Corp division BSkyB owns a 22% stake in KirchPay-TV and although BSkyB has written off the value of the stake to the tune of £1bn, it had hoped to recoup some of its losses.
However, BSkyB vowed that it would not invest any further cash and would have preferred to exercise its contractual right to force Kirch to buy back the stake for £1bn.
Now this is not an option, it is thought that if Murdoch rescued KirchPay-TV any investment into the division would have to come from News Corp and not BSkyB.
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