German TV, Print Giants End Merger Talks
TV giant ProSiebenSat.1 and print group Axel Springer have walked away from negotiations that would have created a $16 billion company.
Germany's ProSiebenSat.1 and Axel Springer have dropped discussions about a merger, citing likely issues with regulatory approval of the deal, which would have created a $16 billion (€14 billion) media behemoth.
TV giant ProSiebenSat.1, which on Thursday reported strong second-quarter figures, had hoped to profit from synergies through a union with Springer, publisher of Europe's No. 1 tabloid, Bild.
But the two companies, who tried and failed to merge a decade ago, said government regulatory issues over media concentration could not be successfully resolved and that they were walking away from talks. The attempt by Springer and ProSieben to merge in the past was blocked by German antitrust authorities. Insiders suggested talks may also have stalled over questions of ownership. Friede Springer, the widow of company founder Axel Springer, was adamant that she would not relinquish control of her company.
It's the second major corporate deal to fall through for Springer in as many weeks after the Berlin-based publisher missed out in its bid to acquire the FT Group.
Instead of a corporate union, Springer and ProSieben will set up a much less ambitious joint venture, through which they will make joint investments in digital startups. The venture essentially brings together the two companies' existing startup programs, which offer media for equity deals, with Springer and ProSieben offering free advertising on their platforms in exchange for equity stakes in startup firms.
“We are concentrating on working together in the digital sector. There are no plans to change our business structure,” said a spokesperson for Axel Springer.
Even without a mega-merger to announce, ProSieben posted strong quarterly figures on Thursday, with revenue up 11.8 percent to $846 million (€772.5 million) and underlying net income jumping 9.3 percent to $129 million (€118.2 million). Growth has been strongest outside its core TV ad business, part of a corporate strategy to diversify into production and digital operations. ProSieben said it currently gets just over 36 percent of its revenue from outside the TV ad business.
For the year-to-date, ProSieben posted double-digit financial growth, with revenue up 12.2 percent to $1.56 billion (€1.427 billion) and underlying net income 14.8 percent higher at $206 million (€188.1 million).