EC set to block Dutch TV venture

The European Commission will likely block the controversial Dutch television joint venture HMG for violation of European Union competition regulations.

Such a move would be the third time the European Union’s monopoly watchdog has sunk plans by large media groups to concentrate forces in a sector with huge untapped potential brought by new technology.

Announcement coming

An EC official close to competition commissioner Karel van Miert told Variety the EC “will likely announce on Sept. 20 that we cannot accept the deal as it stands.”

On Sept. 1, HMG relaunched three of Holland’s most successful outlets – RTL 4, RTL 5 and Veronica – into a three-channel network, the largest private commercial television venture in Dutch history.

HMG, a holding company backed by Endemol Entertainment, pan-Euro media groups VNU and CLT, and Veronica, will reportedly be given three months to restructure its ownership to meet EU competition regulations.

The major concern of commissioners appears to be Endemol, one of Europe’s top indie production companies, which took a 24% stake in HMG. “Endemol as it stands would be way too big and would present a dominant position in the market, especially on the production end, but also in broadcasting,” the EC official said.

The commission is also worried HMG could corner a fat chunk of Dutch TV advertising revenues – analysts estimate up to 70% – through the venture.

Already in May, when it opened a full investigation into the deal, the Commission said it feared that the concentration of the parent companies’ activities in the new venture could lead to too high a share in the Dutch TV market, in particular regarding advertising.

HMG initially claimed it needed to keep its original structure to compete with the newly emerging breed of megamedia companies coming out of the U.S.

The Competition Commission initially had no legal jurisdiction to get involved with the HMG case because the combined turnover of the backers was too low, but the Dutch government asked it to render a decision on whether the agreement violated EU regs.

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