The head of ProSiebenSat.1 has compared merging Germany’s top broadcasters to the futile quest of Don Quixote, as he championed an independent future for his media company.
Rainer Beaujean, chief executive of the Bavaria-based ProSieben, queried the consolidation case sweeping Europe’s broadcast sector, arguing it amounted to either commercially unsound cross-border deals or regulatory impossible in-country mergers.
“Advertising agencies would complain, customers would complain, it is a nightmare,” Beaujean said of rival Bertelsmann chief Thomas Rabe’s stated long-term aim of combining its RTL network with ProSieben to create a German television superpower.
“I am seriously not thinking of consolidation for us . . . Sure, it is something you can try. But Don Quixote never won,” he added, with a nod to the misplaced idealism of Cervantes’ knight-errant.
As traditional broadcasters have grappled with structural decline and the rise of streaming, ProSieben has been subject to years of ceaseless takeover speculation, along with a rotating cast of strategic investors.
Former Italian premier Silvio Berlusconi’s MediaForEurope holds a stake of roughly 25 per cent including financial instruments, an investment it sees as part of a pan-continental consolidation drive.
Meanwhile, private equity group KKR, the majority owner of Axel Springer, and Czech billionaire Daniel Kretinsky have both bought and sold significant shareholdings in ProSieben since the pandemic.
Asked whether ProSieben would be independent in five years, Beaujean said: “Yes. There is no one with the opportunity and [capability] to take us,” he said, referring to regulatory barriers to clearance.
“We are so relevant for the Germany market. The system works well. You have to be careful not to destroy a landscape that important.”
While saying he would remain open to any formal takeover offers, Beaujean is unconvinced by the plans of his two main suitors: Italy’s MFE and Bertelsmann.
With regard to MFE, he said he would always be open to “smart ideas” but Berlusconi’s group had yet to come to him to discuss the merits of cross-border consolidation.
Bertelsmann has led a push for in-country consolidation among Europe’s broadcasters, starting with the Netherlands and France. Much rides on whether the bid to merge Bertelsmann’s French television business M6 with its larger domestic rival TF1 will secure competition approval in France.
Beaujean said even if it were allowed, Rabe was being unrealistic in proposing ProSieben combined with RTL, since it would control more than 70 per cent of German television advertising.
“It won’t be allowed,” he said, pointing to how recent competition decisions in Germany had been taken on the basis of the narrow television market, rather than a broader definition of advertising.
Beaujean then joked: “Well, if RTL gets as small as Thomas [Rabe] thinks it will without help from us . . . then obviously [a merger] might be possible. But we want to grow.”
ProSieben spans an array of media assets, including more than a dozen free-to-air channels, streaming platforms such as Joyn, production studios, dating sites and a stable of offbeat business bets, including investments through advertising-for-equity deals.
Group turnover in the year to December last year rose 11 per cent to €4.5bn, with two-thirds generated by the entertainment group. Like many traditional broadcasters, shares in ProSieben have been in secular decline, falling roughly 75 per cent from their 2015 high.
Like the UK broadcaster ITV, its stock has fallen 40 per cent over the past 12 months, weighed down by uncertainty over advertising and the sustainability of its broadcasting model.
Beaujean, who took over as chief in 2019, has targeted medium-term annual revenue growth of 4 to 5 per cent and describes his strategy as a best-of-both-worlds approach, combining future-focused digital strategy with a lucrative ad-funded television business.
He still plans to float ProSieben’s dating division ParshipMeet, which is part-owned by US private equity group General Atlantic, but the date has been postponed because of market uncertainty. “We are ready to go whenever the market is open to us,” he said, adding that it could slip into 2023.
On the broadcasting side, Beaujean expected investor confidence in the German group to return as its free-to-air model shined in comparison to the subscription fatigue hitting streamers such as Netflix.
“Since Covid, we’ve seen how robust and strong the television business model is, [especially] when you see how Netflix [and other streamers] are struggling,” he said. “It’s not just about how much money you spend.”
“When people look again at cash flow, sustainability, yields — all the characteristics I am born with, that I am good at — then automatically [confidence] will rebound,” he added. “Classical value hunters will come in.”
Unlike some German rivals such as RTL, ProSieben has avoided big investments in expensive drama and has taken an open approach to distributing its content across digital platforms. “I put my content [on whichever platform] pays me for it,” he said. “Why shouldn’t I?”