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November 20, 2005 4:29 pm

Agency warns on Springer purchase

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Germany’s cartel office has raised the chances of a foreign bidding war for the country’s second-largest private broadcaster by warning Axel Springer, the newspaper publisher, that it has grave concerns about the proposed takeover of ProSiebenSat1.

The monopoly watchdog informed Springer late Friday that “the conditions for the prohibition of the merger are given” as it would split the German TV advertising market between it and Bertelsmann, which owns market leader RTL.

Springer, which publishes Germany’s biggest selling tabloid Bild, said it was still confident of winning approval for the €2.5bn ($2.9bn) deal. Mathias Döpfner, chief executive, said he would produce “good arguments” in talks with the cartel office, which are to start by December 8.

Rivals protested after Springer said it would take over the four-channel broadcaster from US investor Haim Saban in August. They argued that strong national franchises in TV and print would give Springer excessive power in both markets.

Ulf Böge, head of the cartel office, was so concerned that he ordered three-month, rather than the more standard four-week, probe. The independent Commission on Concentration of Media Ownership (KEK) also launched an investigation.

Despite this, Springer has repeatedly said in public the monopoly watchdogs would rule in its favour. But privately, executives have been more cautious, noting that a veto would force them to choose between asking the government to override it and bowing out.

This would open the way for a possible bidding war between foreign rivals. Rupert Murdoch, the media tycoon, in February denied he wanted to take over ProSieben. But German industry observers have said that his company, News Corp, and US rivals Viacom and General Electric, all had a look at the company before Springer made a bid.

Should Mr Döpfner apply for special permission from the government, Angela Merkel, the new chancellor, would have to choose between overruling her regulator and opening the door to foreign media players. 

 

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