The Prohibition of the Proposed Springer-ProSiebenSat.1-Merger: How much Economics in German Merger Control?

Budzinski/Wacker: Springer-ProSiebenSat.1-Merger

The competition agency is certainly correct in refraining from taking into considera-
tion that this regulation might be (or might not be) liberalised in the long run in the
face of a increasingly controversial discussion about the value and height of TV fi-
nancing through public fees. Furthermore, the remaining private stations are special-
ised on specific niches.

Regarding potential newcomers, the Bundeskartellamt (2006: 36-37, 41) holds with-
out much reasoning that they will find it hard to compete with the established stations
becausee of substantial barriers to entry and barriers of mobilty in the German TV
market. This stands in line with previous analyses of media markets (e.g. Rott 2003:
161). However, one must wonder whether this is still valid. One prominent reason for
entry barriers has always been frequency scarcity. In the face of satellite TV and the
increased role of digital technologies in terrestrial and cable broadcasting, this prob-
lem has already lost and will further loose much of its significance.¹⁴ Another re-
markable entry barrier is represented by the ability to offer a full-range program,
which in the first place is restricted by the availability and price of intellectual prop-
erty rights (shows, concepts, etc.). However, existing entry barriers must be compared
to the abilities and resources of potential entrants in order to assess their deterrence
effect. TV markets have been national and so was the scope of the players. However,
more recently a wave of internationalisation activities by big media companies has
accelerated (Nikolinakos 2004; Idot 2006). Potential entrants into the German TV
market include big European and American TV networks, which dispose over sub-
stantial financial resources as well as comprehensive broadcasting rights, etc. The
decision of the German competition agency does not clarify sufficiently why entry
barriers should be too high for such potential competitors. The Bundeskartellamt
(2006: 37-38) merely hints to the fact that no successful major entry has taken place
in the last couple of years. Apart from not being entirely indicative for future entries
in and of itself, the lack of entries can alternatively be explained pro-competitively:
the absence of supra-competitive profits might have rendered entry into the German
TV market less attractive.¹⁵ Eventually, the ongoing trend towards a convergence of
media might lead to a more integrated media market - both regarding different media
types (e.g. internet TV) and the geographic scope - thereby bringing new dynamics
and new competitors into the market (Chon et al. 2003; Bernitz 2006: 198-199;

¹⁴ Besides, the need for a broadcast licence from one of the regional authorities
(Landesmedienanstalten) constitutes some kind of an institutional barrier to entry. In fact, the
conditions that must be met in order to get a licence can be characterized as general minimum
requirements that are the same for all market participants and their fulfilment constitutes a claim for
the licence. Thus, the licensing procedure is not per se discriminatory. Furthermore, the KEK must
consider possible risks for the diversity of opinion (e.g. caused by concentration of ownership). For
detailed information see the relevant wording of the law
in the RStV (Rundfunkstaatsvertrag), available at http://www.lfm-nrw.de/downloads/rstv_8.pdf,
and in addition for example in the Landesmediengesetz NRW, available at http://www.lfm-
nrw.de/recht/landesmediengesetz/.

¹⁵ Interpreted this way, the allegedly anticompetitive parallel movement of prices discussed in the
preceding paragraphs may well be viewed as a result of fierce competition, driving prices to their
competitive level.

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