Germany’s public broadcasters are fast losing their competitive edge: Both ARD (the Federation of German Broadcasting Corps.) and ZDF (literally, Second German Television) are being squeezed by soaring prices for top-tier U.S. programming and are embattled at home by forces trying to limit their growth.

Before the last round of media mergers in the U.S., ARD – a federation of eight regional pubcasters that operates its own national channel – was in a league with the world’s largest media companies. It boasted an annual war chest of $7.2 billion in license fees alone. ZDF, the second national public network created by an agreement among Germany’s 16 regions, pulled in another $1.3 billion in 1993 in both advertising and federal funds.

But these are hard times for Germany’s public broadcasters: ARD watched its own ad revenues plunge 22% last year to $227 million and ZDF will be forced to borrow $200 million in emergency funding this year.

Although calls for the ARD system to be completely dismantled have died down over the last year, feisty commercial broadcasters continue to argue that both ARD and ZDF should shrink, rather than grow, as the German broadcast market prepares to go digital.

One area in which the pubcasters are indeed diminishing in clout is on the program acquisition front.

At a meeting on Oct. 16, the supervisory committees of both public broadcasters called upon the directors of the public companies “to exhaust all possible means (of developing) a common, cost-reducing acquisition policy,” according to a press release. That’s because they have recently lost out on a number of top-tier product offered in the German market:

* In July, ARD/ZDF dropped out when the bidding hit $150 million for a hefty Warner Bros, package of feature films and TV series. Even that bid had to be mounted with the help of Rupert Murdoch-controlled weblet Vox, a partner whose support the pubcasters have frequently solicited this year. The five-year TV deal, which included the last three years of Warner TV and film product plus lots of catalog, eventually went to commercial rival RTL for $250 million.

* In August, ARD’s acquisition arm Degeto was caught sleeping as two regional pubcasters from southern Germany, acting as part of the Telepool syndicate which includes Switzerland’s SRG, snagged 10-year rights to DreamWorks film and TV product beginning in 1998.

Although ARD program director Guenter Strueve now boasts the package will enrich ARD’s own programming larder, the truth is Degeto was too slow off the block to negotiate the deal. It will now pay a premium price to acquire the DreamWorks product from intermediary Telepool.

* In mid-September, 20th Century Fox’s recent TV product went to Vox, perhaps not surprising since Fox chairman Murdoch is the controlling shareholder at the German weblet. That deal included three new Fox series – the highly touted “Murder One” among them – and as many as 10 TV movies.

ZDF Enterprises managing director Werner Schwaderlapp told Variety he didn’t think the pubcasters could land the next big deal, a Paramount package, given current price levels for top U.S. product.

“Since the Warner deal, American sales executives are under enormous pressure to perform as well as (Warner Bros. Intl. Television president) Jeff Schlesinger,” Schwaderlapp said.

“It’s the first time in the history of acquisition that prices are being paid which can not be amortized in the German ad market. Certainly people have paid more for a single film than they could earn back, or even for three or four films, but never for a package of these dimensions.”

ZDF’s biggest acquisition deal this year was a 40-pic package from Connexion, the Hamburg-based sales and distribution company previously run by Willy Baer. Sources close to the deal pegged the sale at DM30 million ($22 million). Schwaderlapp would not comment on the price.

ARD has had less luck. It has yet to finalize the acquisition of a big package from the Kirch Group, which includes the first 11 installments of “The Bible” miniseries and 57 hours of internationally co-produced TV movies and series. Analysts consider the package pricey at $25 million and negotiations continue.

At the recent Mipcom TV market in Cannes, Degeto closed its biggest deal of the year, a 30-film output deal with NBC over the next three years. The agreement includes an additional 23 films and series from the Peacock catalog and an option to co-produce several upcoming TV movies. Klaus Lackschewitz, managing director of ARD film rights subsidiary Degeto, confirmed the deal but refused to discuss price.

“I’m not depressed,” Degeto’s Lackschewitz said, when asked about the competition. “There are plenty of good films out there.”

But Lackschewitz did concede that competition from private broadcasters, particularly from PRO 7, the web controlled by Leo Kirch’s son Thomas, was making it extremely difficult to pick up rights. “Everywhere I went (at Mipcom), (PRO 7 managing director Georg) Kofler was either already there or due any minute,” Lackschewitz said.

Between them, ARD and ZDF air some 800 hours of movies per year, catering mostly to an older crowd. Though their existence is guaranteed by the German constitution and their legacy long pre-dates commercial television, ARD and ZDF increasingly have come under attack here as bloated bureaucracies.

Commercial broadcasters and industry trade groups such as the VPRT (Assn. of Private Broadcasting & Telecommunication), for instance, have voiced frequent and loud opposition to ARD and ZDF’s plans to get involved in the digital pay TV business.

The pubcasters already have plans for a parliamentary channel, a kidvid channel and as many as four other unspecified weblets. They also belong to a consortium that wants to manage the infrastructure of digital television.

ZDF’s Schwaderlapp said rising prices and shrinking revenues would force a realignment of budgetary priorities at the pubcasters. “In the course of the next year there is going to have to be a serious discussion about re-weighting acquisition, production and co-production.”

But if the pubcasters are investing in digital expansion, there can be little doubt that they will increasingly drop out of the competition for pricey, high-volume packages of top-shelf Hollywood fare.