German Media Giants ProSiebenSat.1, Axel Springer End Merger Talks

LONDON — German broadcasting giant ProSiebenSat.1 Media and German publishing titan Axel Springer have ended an attempt to merge, which would have created a business worth around Euros 14.4 billion ($15.9 billion).

“ProSieben is not planning or contemplating a merger with Axel Springer,” Julian Geist, a ProSiebenSat.1 spokesman, said Wednesday.

Instead the companies will jointly launch a project to promote digital start-ups.

The merger would have faced regulatory and anti-trust challenges. A move by Springer 10 years ago to buy ProSiebenSat.1 failed after opposition from Germany’s media watchdog KEK and the country’s anti-trust body. However, the media landscape has changed since then, with the rise of digital rivals. Last year, the Federal Administrative Court over-ruled the KEK’s objections to a merger, and the more competitive landscape would probably nullify any anti-trust concerns.

Another obstacle that may have stopped the merger is that the Springer family wanted to keep control of Axel Springer even if its stake dropped under 50% from the 57% share it has now.

ProSieben, which is worth around Euros 9.7 billion ($10.7 billion), owns a network of TV channels that had a 28.9% share of Germany’s free-TV market in the first quarter. Stations include SAT.1, ProSieben, kabel eins, sixx, SAT.1 Gold and ProSieben MAXX. It is an avid consumer of Hollywood content, and has a licensing deal with Warner Bros., among others. It’s facing competition from recent digital entrants to the German market like Amazon and Netflix.

Springer, which is valued at roughly Euros 4.7 billion ($5.13 billion), owns Germany’s best-selling daily newspaper, Bild, and last year bought news channel N24 from ProSieben. Both ProSieben and Springer have been investing heavily in online platforms.

Sixty-three per cent of Springer’s revenues and 73% of its core profit came from digital products in the first-quarter of this year. Investments in the U.S. include Ozy, an online magazine for news and culture, the online business magazine Business Insider, the social-video-news media company NowThis Media, the Pixlee photo-community and the Airbnb accommodations marketplace. Recent investments have included Mic.com, a news platform for 18 to 34 year olds.

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