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January 16, 2006 6:25 pm

Axel Springer abandons plan to sell TV channel

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Axel Springer, the German newspaper publisher, has abandoned its plans to sell a television channel to save its takeover of a leading broadcaster, in a move that clears the way for it to take legal action over regulators’ handling of the affair.

The decision is a further blow to its controversial and mishap-ridden attempt to take over ProSiebenSat1, Germany’s second-largest commercial broadcaster, and increases the chances that the TV company could be sold to a foreign bidder or split up.

Springer has refused to give up on the €4.2bn ($5bn) transaction and is considering all options, especially legal ones, which it can only use if it has withdrawn its disposal offer. It said it expected the Cartel Office to rule against the takeover but it could overturn this decision either in the courts or by permission of the economics minister.

On Monday it criticised the intransigence of the Cartel Office, which has insisted it sell the Pro7 channel before it owned the broadcaster and not after as Springer had offered.

Springer said it had asked the Cartel Office for a week longer to thrash out new terms with ProSieben’s owners, who include US media investor Haim Saban, but it was turned down.

When Springer then withdrew its offer to sell Pro7 a few hours later, the Cartel Office asked for a week extension to prepare its decision, now due on January 27.

“It is totally curious,” Springer said. A Springer executive was more forthright: “It is downright trickery.”

Springer’s offer also faces criticism from a second regulator, the KEK, which is the media committee of German states. To overturn KEK’s ruling, also likely to be negative, two-thirds of Germany’s 16 states need to vote in Springer’s favour.

State politicians have spoken out in favour of Springer, which publishes Germany’s leading tabloid Bild. Edmund Stoiber, premier of Bavaria, where ProSieben is based, said: “A strong integrated German media group in both print and electronic media is a great advantage.”

Regulators fear Springer’s dominance of the tabloid and TV markets could lead to a duopoly with market leader Bertelsmann, which in turn would entail huge increases in advertising rates and threaten the diversity of media in Germany. Their demand that one of Bild, Pro7 or Sat1 be sold by Springer was initially dismissed but then accepted for the popular Pro7 channel.

Springer, however, felt it needed time to try and find a buyer for the channel at what would likely be a knock-down price. Potential foreign bidders included France’s TF1, Luxembourg’s SBS Broadcasting and Central European Media Enterprises. Shares in ProSieben jumped 4.1 per cent.

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