German ad rebates costly

RTL, ProSieben fined $306 mil

Germany's two leading commercial broadcasters have been fined a total of more than $300 million for anti-competitive practices in booking on-air advertising.

RTL Television and ProSiebenSat.1 agreed to the fines Friday as part of an out-of-court settlement with Germany's cartel office.

ProSiebenSat.1's ad booking subsidiary SevenOne Media was fined €120 million ($170 million). RTL's IP Deutschland has to pay €96 million ($136 million).

At issue was the widespread practice of so-called share of advertising deals between IP/SevenOne and ad booking agencies. 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.

Germany's cartel office ruled that in the case of SevenOne and IP, share deals were anti-competitive because they locked up the TV advertising market, making it difficult for smaller channels to compete.

Between them, IP and SevenOne are responsible for more than 80% of the German television advertising market. This is roughly proportional to the market share that RTL and ProSieben-controlled channels have of the key 14-49 demographic in Germany.

SevenOne and IP Deutschland plan to unveil their new ad pricing models to clients this week. But ad-booking agencies are fearful that the change could be bad news for them and their advertising clients.

"We're worried that the broadcasters will use this ruling to just give fewer rebates or lesser rebates," said Hans Kratz, spokesman for German media agency association OMG.

"Share of advertising deals were standard practice for a long time," an IP Deutschland spokeswoman said. "Now we have to do a lot of work to win back trust with our customers."
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