One in all France’s richest males and a strong German media dynasty are battling to win approval for a company union that will reshape European broadcasting and overturn what was thought doable in TV offers.
If authorized later this 12 months, the merger of The broadcaster of Martin Bouygues TF1 and its little rival M6owned by Germany’s Bertelsmann, might pave the way in which for a wave of mergers throughout the continent.
However the settlement rests on a necessary situation which is much from sure: the inexperienced mild from competitors regulators to unite what’s France two largest personal broadcasters, making a dominant pressure in nationwide free-to-air tv promoting with a market share of roughly 70 p.c.
“If authorized, this determination will doubtlessly reset the European tv market in a manner that liberalization and industrial tv reshaped the market within the Eighties,” mentioned Francois Godard of Enders Evaluation. “It is completely essential.”
The two parties argue that current restrictions on media mergers, that are largely based mostly on TV promoting market share, needs to be relaxed to mirror altering internet marketing spending, the rise of worldwide streaming teams resembling Netflix and Disney, and the shrinking viewership of conventional tv.
However behind the scenes, the proposed merger is going through a wall of opposition from advertisers, rivals and opposition politicians, who see it as a basic company ploy to safe market energy with a purpose to elevate costs, on this case for promoting.
Efforts to realize approval for the competition are coming into a essential part over the following few weeks. Opponents are more and more hoping that the French competitors authority will not let it go. An govt who had seen the submission from Arcom, the French broadcasting regulator, mentioned he was “not very heat” and instructed different authorities concerned within the course of had been additionally suspicious.
David Assouline, senator of the socialist get together who was rapporteur this 12 months on a high level investigation in media focus in France, mentioned that the arguments put ahead by TF1 and M6 in favor of the merger are “merely not credible”.
“They are saying they do that to seek out the energy to face the massive platforms. It is not true. What they’re making an attempt to do is dominate their native market in France. It is a joke .” TF1, M6 and Bertelsmann declined to remark.
Billionaire industrialist Bouygues could also be betting that his household’s appreciable political clout shall be sufficient to win approval.
Along with TF1, which operates the nation’s most watched night newspaper, Bouygues owns main building, street and telecom firms, which maintain quite a few contracts with nationwide and native authorities.
President Emmanuel Macron has a long-standing relationship with Bouygues, whose media shops he thought he ought to preserve as he runs for re-election this 12 months, in keeping with individuals conversant in his place. Macron’s determination final 12 months to not renew Isabelle da Silva for a second time period as head of the competitors authority sparked hypothesis that he needed another person to rethink the TF1 deal- M6.
On the identical time, the Bertelsmann household group is pursuing its consolidation technique past France. It is usually looking for approval for a deal to mix its RTL enterprise within the Netherlands with Talpa Community, the Dutch media group based by Large Brother creator John de Mol.
Thomas Rabe, managing director of Bertelsmann, throws it as a part of a marketing campaign to create “native language champions” in Europe, who’ve the dimensions and distinctive content material to compete with Netflix and Disney in nationwide markets.
Rabe expressed hope to ultimately unite Bertelsmann’s RTL with German rival ProSiebenSat.1 – an aspiration of ProSieben’s managing director over the futile quest for Don Quixote.
The French and Dutch offers certainly take a look at whether or not Bertelsmann’s technique to counter international broadcasters and streaming teams is viable.
Bankers say if authorized it could pave the way in which for different offers within the nation bringing collectively industrial broadcasters in Spain, Scandinavia and Central and Japanese Europe. A change in method by European competitors authorities might additionally assist ITV’s aspirations to accumulate a privatized Channel 4 within the UK.
“The genie got here out of the bottle on the necessity for consolidation,” mentioned an adviser to a significant European media group. “The query now could be: will this be allowed? Even when this doesn’t go in France, the pressures shall be appreciable. Will probably be tough to include. »
With the settlement proposed in France, Bertelsmann and Bouygues set themselves the best order.
The mixed group would signify greater than 70 p.c of the French market free of charge tv promoting, properly past what is usually allowed.
To treatment this, TF1 and M6 are pushing the Competitors Authority, which is midway by its investigation, to overview its definition of the “related market”. As an alternative of simply TV advertisements, a broader method would cowl the a lot bigger digital promoting market, together with giants like Google, YouTube and Fb.
Over the following few weeks, the authority will privately inform TF1-M6 of its openness to such arguments and description the particular competitors points that must be resolved.
Bertelsmann made comparable arguments to Dutch regulators contemplating his plan to unite RTL with Talpa, the place the mixed group would management greater than two-thirds of the free TV promoting market. Rivals and advertisers have expressed their opposition to it.
“It is by no means good to provide the market to a monopoly,” mentioned Erik Roddenhof, managing director of DPG Media, which operates in Belgium, the Netherlands and Denmark. “If RTL merges with Talpa, there shall be no room for different industrial TV channels within the Netherlands.”
DPG aspires to increase into Dutch tv, nevertheless it has particularly expressed concern about market focus which is hurting its radio station Qmusic. RTL and Talpa declined to remark.
The implications of a constructive determination in France or the Netherlands could be appreciable, together with for advertisers. Most executives anticipate costs to rise for advertisements proven on free-to-air TV throughout prime time — a value they are saying will in the end be handed on to shopper costs.
Whereas greater than half of advert spend goes to digital platforms, they are saying broadcast TV is not simple to switch; for a lot of manufacturers, it nonetheless has a novel viewers and impression.
Jean-Luc Chetrit, who heads a French commerce group representing the manufacturers, mentioned competitors regulators had been trying intently on the impression of the proposed deal on advertisers. “They despatched out two questionnaires and interviewed over 1,000 advertisers through the overview, which is fairly uncommon.”
Some latest developments have strengthened the hand of TF1 and M6. For the reason that unveiling of the proposed merger, Netflix and Disney have introduced that they may introduce promoting on their subscription platforms.
However overcoming regulatory reluctance stays a substantial problem.
A French media official who’s following the deal intently mentioned it was most unlikely the definition of the related market could be widened to incorporate each tv and internet marketing. And if that request had been denied, they mentioned, it could be tough to seek out “treatments” to scale back the mixed group’s market energy with out eroding the very synergies that prompted the deal.
TF1 and M6 have already lined up consumers for 2 of their TV channels, TFX and 6ter, to satisfy any possession caps. However that would not drastically change their market share of free TV promoting. The rivals are additionally skeptical that splitting their advert gross sales operations – so TF1 and M6 marketed their promoting stock uncoordinated – would make a significant distinction.
An alternate choice could also be to limit how TF1 and M6 can promote promoting stock and use the information – presumably by making it brazenly accessible to different advert networks. However such treatments are maybe an excessive amount of for TF1. “Bouygues does not like the thought of buying and never controlling,” mentioned one other French media official. “I’ve a sure stage of sympathy.”
Nicolas de Tavernost, the longtime chief govt of M6 who is ready to steer the merged firm, instructed Le Parisien newspaper earlier this month that there have been limits to what TF1 and M6 would concede to do. approve the settlement.
“I’ve all the time mentioned that if situations had been imposed, it meant that [the two companies] could not actually get collectively, so there is not any level in getting married.