German media giants talk tie-up

DetailsMichelle Clancy | 08 July 2015

German media group ProSiebenSat.1 and publisher Axel Springer are reportedly in merger discussions. If the talks come to fruition, the combined company would be worth around 14.5 billion ($16 billion).

The Wall Street Journal broke the news, citing unnamed sources. The transaction would shake up the media market in Europe's biggest economy: ProSieben has a 44% share of the German TV ad market (Pro7Sat.1 and its channels have a healthy 29% market share of Germany free-to-air broadcast market already). And, Axel Springer is the biggest player in national newspaper advertising. Together they would form a dominant force in German advertising and a counterweight to its main rival, privately held Bertelsmann.

The combination would run counter to the prevailing winds in media and entertainment structures. Many of the Big Media leaders have created separate print and TV/film operations. Time Warner spun off its Time Inc magazine unit, and Fox split into 21st Century Fox and News Corp; most recently, Gannett has separated its business into two: broadcast and digital properties gathered under a new name, Tegna, which will trade on the New York Stock Exchange under the symbol TGNA; and the newspaper and publishing business, which will retain the name Gannett.

If it goes through, ProSieben would emerge as the senior partner in the transaction.

Given their size and dominance, gaining regulatory and antitrust approvals may be difficult for the pair.

But, there could be some daylight here. The discussions come ten years after the two first tried to merge; that deal was denied by the country's media watchdog. But last year, Germany's Federal Administrative Court ruled that the regulatory opposition back in 2005 was unfounded.