RTL Should be Allowed to Merge with ProSiebenSat.1 says RTL Group CEO Rabe

Thomas RabeThomas Rabe, head of European media giant Bertelsmann and its broadcasting arm RTL Group, said this weekend that RTL should be allowed by regulators to merge with German broadcaster ProSiebenSat.1, in order to be able to compete with international streaming giants.

“It is vital that sensible partnerships, and even large mergers, are allowed in order to create national champions in television – for example between RTL and ProSiebenSat.1,” said Rabe in an interview with German newspaper FAZ. “Otherwise, national companies will simply have no chance in a few years against the giants from Silicon Valley.”

Rabe’s comments don’t necessarily mean that a merger between the two companies is on the cards, as ProSiebenSat.1 put out a statement following the interview saying that “no talks are taking place at the moment on mergers or acquisitions”. But Rabe implied that European regulators should be more open to allowing mergers of that scale, given the threat to traditional broadcasters posed by the likes of Netflix, Disney+, and Apple TV+.

European regulators have seemed to soften their stance on cooperation between major broadcasters in recent years. In the UK for example, a proposed Netflix-style service to be joint-developed by the BBC, ITV and Channel 4 was scrapped by the Competition Commission back in 2009. But last year BritBox, essentially a realisation of this initial idea, was passed by the UK’s competition authority and has been able to go to market.

Across Europe as well we’re seeing more cooperating between broadcasters. RTL and ProSiebenSat.1 are currently working together on an addressable TV advertising offering called ‘D-Force’, while French broadcasters TF1, M6 and France Télévisions will release a joint streaming service in June this year.

But having been held back by regulators for years, some now fear these initiatives are arriving too late. Analysts told VAN earlier this year that while they believe that BritBox is a good and necessary initiative, its late entry into the market will make it tough to compete with other new entrants boasting bigger budgets.

Hence, more drastic measures, like the large scale mergers Rabe suggests, might be in order. Italy’s Mediaset has been making moves in this direction, setting up a holding company called Media for Europe which it wants to use to bring together European broadcasters and create a pan-European broadcasting giant. Mediaset has built up a 15.1 percent stake in ProSieben as part of this plan.

Mediaset’s ambitions have been held up in court, though this has been initiated by hostile shareholder Vivendi rather than any competition authorities. But if it wins its case against Vivendi, European competition bodies might then target Mediaset themselves.

Rabe believes that current competition law likely would block large scale mergers, and that it needs to be updated to suit the modern media landscape. “Competition law does not take into account the forms in which the U.S. platforms are increasingly coming to dominate the media and advertising,” he said.

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