German b'casters fined $300 mil for ad practices

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COLOGNE, Germany -- 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 on Friday agreed to the fines 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 next week. But ad-booking agencies are fearful 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.

"This ruling has caused a lot of uncertainty between us and our advertising clients," admitted Cordelia Wagner, spokeswoman for IP Deutschland. "Share of advertising deals were standard practice for a long time. Now we have to do a lot of work to win back trust with our customers."

Friday's ruling does not apply to smaller German commercial channels such as RTL 2, Tele 5 or NBC Universal's Das Vierte, which will still be allowed share-of-advertising style deals.

Both RTL and ProSiebenSat.1 said Friday that despite the fines and the introduction of new advertising models they would meet their year-end performance targets.
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