Given fair warning

EC questions media giants' digital TV alliance

BERLIN — The European Commission has sent a letter to media giant Bertelsmann warning the company against another try at forming an alliance with Leo Kirch on digital TV, according to press reports here.

The finance daily Handelsblatt reported that the EC’s merger task force director Goetz Drauz warned that the media giants’ latest application to raise stakes in pay TV channel Premiere would be rejected if the companies planned to step up cooperation in digital TV.

Kirch and Bertelsmann recently applied to the German cartel authorities to increase their stakes in Premiere to 50/50 and to expand Premiere digital to offer 15 channels.

EC rejection

Last May, the EC rejected a similar application that additionally asked for the Kirch Group’s digital web DF-1 to be merged with Premiere, as well as for joint stakes (Kirch, Bertelsmann, Deutsche Telekom) in d-box decoder development company Beta Research.

Currently, the new application is under the jurisdiction of the German cartel authorities and not Brussels, but, according to the paper, if Kirch and Bertelsmann sign a letter of intent to form a similar alliance as planned in their original application, the EC will get involved.

According to Handelsblatt, the letter was also intended as a reaction to recent speculation that antitrust commissioner Karel van Miert doesn’t want to involve himself in German merger issues preceding the general election on Sept. 27.

Tied up in knots

Digital television is having a hard time getting past the starting line in Germany, with red tape holding back the main contenders — which at present are Kirch and Bertelsmann.

The authorities are concerned that an alliance in digital TV, besides developing a monopoly, might also lead to cooperation on their free television activities. And between them, Kirch and Bertelsmann are estimated to account for more than 90% of ad revenues in free TV in Germany.

Bertelsmann could not be reached for comment.

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