ProSiebenSat.1 sale draws call for legislation

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Bavarian premier Edmund Stoiber is calling for an overhaul of Germany's antitrust legislation in the wake of last week's $4 billion takeover of leading German broadcaster ProSiebenSat.1 by foreign investors KKR and Permira.

KKR and Permira beat out two other foreign bidders to grab the broadcaster. ProSiebenSat.1 owns five free-TV and two pay TV channels, has a 30% share of the total German television audience and 45% of the territory's TV ad revenue.

An earlier bid for ProSiebenSat.1 by German publisher Axel Springer was blocked by local antitrust regulators.

The KKR/Permira takeover still must be approved by German regulators, but that is expected to be a formality as neither group has any significant German media assets.

In a separate development, Springer, which still controls 12% of ProSiebenSat.1, said it has "no immediate plans" to sell its stake.

In an interview published Monday in German weekly Der Spiegel, Stoiber argued that tough regulatory laws put German firms at a disadvantage compared with international investors.

"We are tripping ourselves up when we make it harder for German companies than for their international competitors," Stoiber said. He called for a change to antitrust laws to put German firms on a "level playing field" with foreign companies.

The issue of foreign takeovers in Germany is particularly controversial in the television world. Unlike most countries, including the U.S., Germany has no laws barring majority ownership of national broadcasters by foreign firms.

In fact, last week's auction marked the second time ProSiebenSat.1 has been sold to a non-German bidder. In August 2003, a group of foreign investors led by Haim Saban acquired the Munich-based broadcaster for €525 million. At the time, Saban and his partners said ProSiebenSat.1 was a "long-term investment."

KKR and Permira are making no such promises of longevity. In a conference call with journalists Friday, the new ProSiebenSat.1 owners said they expect to hold on to the broadcaster for about five years, before selling it off again.

Before that, KKR/Permira has plans for ProSiebenSat.1. They plan to merge the German group with pan-European broadcaster SBS Broadcasting and build a European TV giant to take on Bertelsmann's RTL Group.

On Friday, KKR/Permira said its goal is to create Europe's "No. 1 broadcaster" (HR 12/18).

To achieve that, ProSiebenSat.1 and SBS must significantly boost their revenue and profit margins.
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