Possibility of Axel Springer’s purchase of ProSiebenSat.1 reexamined

Article  by  Kevin PICCIAU  •  Published 30.11.2010  •  Updated 01.12.2010
[NEWS] Axel Springer's purchase plans on ProSiebenSat.1 may be given another chance.
The Federal Administrative Court of Germany (the Bundesverwaltungsgericht) recently announced that the possibility of the Axel Springer media group’s acquisition of television group ProSiebenSat.1 would be soon reexamined.

The case is far from new. In 2005, Axel Springer, one of the most powerful media groups in Europe today, bought ProSiebenSat.1 and its five TV channels; however, the operation was then cancelled, due to negative judgments given by regulatory authorities charged with overseeing media pluralism and competition. In the early years of 2000, Axel Springer already owned 12% of ProSiebenSat.1, which was the property of Leo Kirch, the other German giant in that sector. After Kirch was taken in a financial disaster in 2003, an investor consortium built around Israeli-American billionaire Haim Saban bought ProSiebenSat.1 Media, gaining 50.5% of the capital and 88% of voting rights. Two years later, in the summer of 2005, the former symbol of what was once “Kirch Television” was bought by Axel Springer for 2.5 billion euros.

This operation was extremely significant, allowing the Springer group to enlarge its power in the fields of publishing and publicity. The group owns, among other famous publications, Bild, the best-selling German newspaper, and the daily newspaper Die Welt – with a successful incursion in the television sector as well, as current owner of two of the largest German private general-interest TV channels, ProSieben and Sat.1. With its latest purchase, Axel Springer also became the second most important German media group, just behind Bertelsmann. At the time, the German market was marked by a serious crisis in the publicity sector. In this context, the Axel Springer group had only two solutions to ensure growth for its upcoming activities: to strengthen its press activities on an international level, and to diversify its activities on a national level, by becoming active in television.

But in early 2006, the German Federal Court (the Bundesgerichtshof) declared the purchase invalid, on the basis of judgments: one by the KEK (Kommission zur Ermittlung der Konzentration im Medienbereich, the commission in charge of evaluating media) and one, pronounced ten days later, by the Federal Cartels Office (the Bundeskartellamt). The reason provided by the KEK: by gaining two of the most important private TV channels, which offer a new exposition and new possibilities for cross-media publicity, the Axel Springer group could exert a dominant position on German public opinion. According to the Federal Cartels Office, Axel Springer also owned a threatening portion (more than 40%) of the German media market. The Springer-ProSiebenSat.1 fusion was thus declared invalid in the name of respect for pluralism and competition law in the media sphere (read the article by Alexander Scheuer, "La fusion Springer/ProSiebenSat.1 n'est pas conforme au droit des médias", Merlin Iris online legal database, 2006).

Every important German newspaper wrote about the re-opening of the Springer-ProSiebenSat.1 case by the Federal Administrative Court, after Springer protested the initial decision. But journalistic coverage of the case played no considerable role, given that the rules concerning concentration for media companies did not change in the wake of this case, and Springer has no hopes of overturning the judgment given by the Federal Cartels Office. The only way to contest the decision is to question the judgment by the KEK, which is the point the Bundesverwaltungsgericht is going to analyze once again. But even if the conclusion turns out positively for Springer, it will not be possible for the Axel Springer group to purchase the totality of ProSiebenSat.1. The Springer battle is all the more questionable given that the group sold its initial 12% of ProSiebenSat.1 Media in 2008. It will be no surprise if Axel Springer gains nothing but a bad reputation for future negotiations and purchases, due to the number of legal procedures it has initiated for a cause that was lost in advance.

Photo credit: Axel Springer website

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