German ad bookers in hot water

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COLOGNE, Germany -- Prosecutors in Cologne and Munich have begun criminal investigations targeting the heads of Germany's two largest on-air booking firms.

Peter Chistmann of broadcaster ProSiebenSat.1 and Martin Krapf from RTL Television's on-air booking subsidiary IP Deutschland are both being investigated.

The pair are under suspicion of corruption in connection to so-called share of advertising deals between IP/ProSieben and German ad booking agencies.

The two companies had to pay more than $300 million in fines last year after Germany's cartel office ruled that that the deals were anti-competitive.

Under these deals, a standard practice in Germany and elsewhere, agencies receive rebates for agreeing to book a certain percentage of their ad-spend with a broadcaster. In the case of ProSiebenSat.1 and RTL, German authorities said the deals effectively locked up the German market since RTL and ProSiebenSat.1 together account for around 80% of the territory's television ad spend.

The fines -- 120 million euros ($177.3 million) for ProSiebenSat.1 and 96 million euros ($141.8 million) for IP Deutschland -- cut into profits at both German giants. RTL parent Bertelsmann was further hit by 393 million euros ($580.7 million) in payoffs in Napster-related lawsuits.

Both IP and ProSieben have since changed their rebate policies to comply with the cartel office ruling.

But the investigation into the matter is far from over. German prosecutors suspect that media agencies that received the hefty rebates may not have passed them on to their clients.

Krapf and Christmann are not accused of directly profiting from the deals, but if any media agencies did not pass on rebates, the two TV executives could be found guilty of abetting the illegal graft.

The city prosecutors' office in Cologne told The Hollywood Reporter that there was, as yet, no concrete evidence of wrongdoing but that the cartel office investigation had raised some red flags. Krapf said he was "unperturbed" by the investigation and confident he would be cleared of any wrongdoing.

ProSiebenSat.1 confirmed that an investigation into Christmann was under way but declined further comment.
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