Bertelsmann chief warns of ‘profound’ fallout if French TV deal blocked

German media group Bertelsmann has urged competition regulators to drop outdated concerns about the proposed merger of France’s two biggest private broadcasters, as it warned of the “profound impact” on Europe’s entire television sector if the deal is blocked.

Bertelsmann chief executive Thomas Rabe said the looming regulatory decision on the planned combination of M6 station with Bouygues-owned TF1 would set a continent-wide precedent that could hobble Europe’s broadcasters in their battle with US streaming services.

“If the authorities decide against this combination, it is a lost opportunity, not only for this year but for the long term,” Rabe told the Financial Times, saying the decision was expected in the coming months.

“France is a precedent, positive or negative. It will have a profound impact on the audiovisual sector in Europe, and that is something I very much hope decision makers are aware of.”

Rabe has made media consolidation a centrepiece of Bertelsmann’s strategy, embarking on a flurry of deals in the television and book industry that are testing the limits of what is possible under competition law.

This autumn will be a critical reckoning on the approach, with regulatory decisions due on three deals: Penguin Random House’s proposed $2.2bn acquisition of Simon & Schuster, which has been opposed by the US Department of Justice; the TF1-M6 merger in France; and the tie-up between RTL’s operation in the Netherlands with Talpa Network, the Dutch media group founded by Big Brother creator John de Mol.

Despite an uphill struggle to get the deals cleared, Rabe insisted he was “more convinced than ever” of his strategy to build national champions to fight the global technology giants.

The TF1-M6 deal is particularly important for Bertelsmann but it is looking increasingly in danger. A report last month from French competition authority’s investigation team raised significant concerns, particularly over the combined group’s 70 per cent market share in the national free-to-air television advertising market.

Bertelsmann is trying to convince the authority to broaden the definition of a “relevant market” so it takes account of digital advertising and the plans of Netflix and Disney to carry advertising on their streaming platforms.

While acknowledging the case team’s report was a setback, Rabe stressed it was the competition watchdog’s board that took the final decision.

“We are optimistic but not naive. We always knew it would take a significant effort to convince the authorities to change the definition of the market,” he said. Should the deal be prohibited, Rabe said it was “very unlikely” that M6 would attempt a similar tie-up in coming years.

“If this deal does not go through in France then it is going to be very difficult for a similar deal to go through in Germany and other countries,” he added, in a nod to Bertelsmann’s longstanding interest in potentially acquiring the rival broadcaster ProSiebenSat. 1.

Bertelsmann is also challenging the US Department of Justice’s market definition in its court battle to save its proposed acquisition of the publisher Simon & Schuster.

The US government argues the deal will stifle competition and reduce book advances, particularly for the most prestigious authors of “anticipated bestsellers”.

Rabe said: “It is a market we are frankly not aware of even though we’ve been in the book business since 1835.”

Bertelsmann on Wednesday reported underlying revenue growth of 3.8 per cent to €9.3bn in the first half of this year. Pre-tax profit fell from €1.8bn to $679mn, mainly as a result of the sale of adtech company SpotX last year.