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German Media Titans ProSiebenSat.1, Axel Springer in $16 Billion Merger Talks

German broadcast group ProSiebenSat.1 and publishing giant Axel Springer are in merger talks that could lead to the creation of a business worth around Euros 14.4 billion ($15.9 billion).

According to the Wall Street Journal, negotiations are at an early stage and the merger would face 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. 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.

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.

In a twist Tuesday, Axel Springer said that the Springer family would keep control of the company even if its stake drops under 50% from the 57% share it has now. This will be facilitated by a change in its legal status from “AG” to “KGaA.” “Thus, speculation regarding a relinquishment of control is completely unfounded,” Springer told Reuters. But it wouldn’t comment on the “substance of market speculation,” which may suggest a merger is still in the cards, albeit with strings attached.

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