Opinions Split on Springer-ProSieben Deal

Reactions were mixed in Germany concerning Axel Springer's announcement on Friday that it would buy a majority stake in ProSiebenSAT.1, the biggest German free-to-air broadcaster.

The acquisition will lead to a major shake-up of the country's media landscape, creating Germany's second biggest media group behind Bertelsmann and moves Springer, the owner of newspapers Bild and Die Welt, into TV for the first time.

High ranking officials at both companies were obviously upbeat at the prospect of joining two of Germany's major media players into one mighty concern.

"We have been saying for a long time that Axel Springer has two strategic growth options: accelerated internationalization of the print business or expansion in the German TV market," said Axel Springer Chairman and CEO Mathias Doepfner after the announcement was made. "With the acquisition of ProSiebenSat.1, we are pursuing a unique opportunity and systematically implementing one of these options."

ProSiebenSat.1 Chairman and CEO Guillaume de Posch was in an equally positive mood. "In combination, both companies are well positioned to assume a strong competitive position and to pursue growth opportunities, particularly in the further diversification of the business." he said. "With Axel Springer it will be ensured that the successful corporate strategy and the broadcasting group model of ProSiebenSat.1 can be continued."

Stoiber heralds a strengthening of the media sector

Bavarian Prime Minister Edmund Stoiber, leader of the conservative Christian Social Union (CSU), was among the first politicians to speak on the takeover and heralded the acquisition saying that the merger would be "an obvious strengthening of the media sector in Germany." Stoiber said that the move would not only secure existing jobs but provide new opportunities for Germans by keeping the seat of one of Europe's media powerhouses in Germany.

Fellow conservative Günter Nooke, the CDU/CSU spokesperson for media and culture in the German parliament, also spoke of the stabilizing effect the merger would have on the currently fluid media landscape in Germany, and in particular that of the capital if the newly expanded company set up base there. "(The merger) would be an excellent and strong contribution to Berlin as a media location," Nooke said.

Wolf-Dieter Ring, president of the Bavarian Center for New Media, the organization in charge of commercial broadcasting in Bavaria, welcomed the merger. "This collaboration is a guarantee for long-term international competitiveness and the journalistic advancement of program quality."

Journalists association fears "opinion monoploy"

However, the creation of such a cross-media behemoth has caused major concern for some. Michael Konken, chairman of Germany's Association of Journalists (DJV) urged the German Cartel Office to block the merger, saying that it would be "disastrous" and would result in an "opinion monopoly".

Konken said a 100 percent ownership of ProSiebenSat.1 will "have negative consequences on information and opinion purveyed to the public, something which does not conform to the ideals of a democratic state."

Frank Werneke, acting president of the ver.di trade union, echoed Konken's concerns about the merger infringing on the public choice and called for "the containment of media power across sector borders and a model of criteria for upholding the interests of the viewers."

Some analysts see Springer deal as smart move

In the markets, however, there were reactions based firmly on the business sense of the deal with analysts predicting a glowing future for the merged media superpower.

"Springer becomes an impressive and powerful force in the German and European media market,'' said Chris-Oliver Schickentanz, an analyst at Dresdner Bank in an interview with Bloomberg. "It will be easier for them to get big advertising accounts and they also will be able to heavily promote TV series in their print publications.''

Alexander Mogg, a media consultant and partner at Mercer Management Consulting in Munich said, "In the mid- and long-term, the TV business probably also has more growth opportunities than the print business. Especially the young generation of consumers prefers visual media products, so Springer is well advised to expand its TV business.''

The takeover agreement is still subject to regulatory approval required under cartel law and media-supervision law in Germany.