Can Axel grease save $3 billion German deal?

Catch-22 means ProSiebenSat.1may end up in foreign hands

BERLIN — With the prospect of foreign firms snapping up Germany’s biggest broadcasting group, the thought of conservative publishing giant Axel Springer expanding its domestic media empire to include ProSiebenSat.1 has suddenly become a lot less menacing to local politicos and media rivals.

Local investors don’t have it easy with the country’s strict antitrust laws, and often find themselves with their hands tied while government leaders decry the invasion of U.S. carpetbaggers out to exploit domestic businesses.

It’s a catch-22 that could soon leave Haim Saban’s ProSiebenSat.1 in the hands of international equity firms or a U.S. media conglom unless the German government comes to Springer’s aid.

Saban was in Berlin last week to meet with Springer CEO Mathias Doepfner for an update on the thorny $3 billion sale.

Despite reports of a gathering crowd of potential buyers ready to step in should the deal for webs Sat.1, ProSieben, Kabel Eins, N24 and 9Live fall through, Springer execs said talks with Saban were “constructive.”

On the face of it, the odds of success don’t look good.

The deal has already been nixed by the Commission on Concentration in the Media (KEK), which seeks diversification of public opinion on the airwaves.

Springer could sidestep the KEK by appealing to the 15 state media regulators, who can veto the KEK ruling with a three-quarters vote — not so unlikely following a recent spat between state regulators and the KEK over methodology.

And Springer has resigned itself to the fact the deal will be rejected by the federal cartel office Jan. 27.

The publisher could challenge that decision in court or seek a waiver from the federal economics minister, an option that could turn out to be its winning card.

Economics Minister Michael Glos has said he would not rule out a special waiver, but it’s not a step he’d take lightly. Since the waiver was introduced in 1973, only seven out of 18 cases submitted for review have been approved.

Yet Glos is a Bavarian conservative — and ProSiebenSat.1 is one of Bavaria’s biggest media companies, with some 2,720 employees.

Edmund Stoiber, Bavaria’s influential premier and local conservative party honcho, supports the Springer deal.

“A strong, integrated German media company with print and electronic media is a great advantage to Germany,” Stoiber said recently in Munich, adding that in view of fierce international competition, German companies should not have to face disadvantages at home.

Roland Koch, another conservative bigwig and Hessian premier, said lasting damage and untold consequences would befall Germany if Springer loses ProSiebenSat.1.

“In the hands of foreign owners, our particular media culture would be threatened rather than promoted,” he adds.

Germany’s coalition government includes traditional rivals, the right-of-center Christian Democratic Union and the left-leaning Social Democrats — long the scorn of Springer’s market-leading conservative tabloid Bild — and that complicates the waiver option.

However, the Social Democrat’s media expert Monika Griefahn says her party may back the special waiver under certain conditions.

But, she stresses, “we cannot accept a dominating power over public opinion only because it’s a German buyer that wields it.”

Even Germany’s powerful pubcasters, which initially were up in arms at the prospect of a Springer-ProSiebenSat.1 merger, have come around to the idea.

“I prefer TV operators from our own country to foreign investors who are playing on a global level,” ZDF topper Markus Schaechter says.

Fritz Pleitgen, head of regional pubcaster WDR, adds that Springer deserves a fair chance.

Springer may have a chance if it brings detailed proposals to the table to get ministerial approval, government insiders say.

That could still mean selling off one of ProSiebenSat.1’s two leading channels, a concession Springer was ready to make but withdrew last week after cartel regulators demanded the web be sold before the group’s acquisition, something Springer said was not legally feasible.

It will be interesting to see how Springer gets around that particular catch-22.

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