The proposed merger of France’s two biggest private television broadcasters, TF1 and M6, has run into stiff resistance from competition regulators, raising the risk that it will not be approved.
Bouygues, the conglomerate that owns TF1, and Bertelsmann-backed RTL, which owns M6, issued a joint statement on Tuesday that said they had received a report written by the French competition authority’s investigation team that raised “a number of significant competition concerns, especially in relation to the advertising market”.
Although the companies pointed out that the competition review process was not over, they suggested that the 450-page report showed it was not off to a good start.
“The nature and extent of the remedies required in the report would mean that the merger plans would no longer be meaningful for the parties involved and they would therefore abandon them,” they said.
TF1 shares were down about 4 per cent in early morning trading in Paris, while M6 fell 7 per cent.
Bouygues and RTL had argued that they should be allowed to team up in France despite the fact that TF1 and M6 would control more than 70 per cent market share in national free-to-air television advertising.
Such a large position would not usually be permitted, but they made the case that competition regulators should revise their definition of the “relevant market” to reflect the changed media landscape, with more consumers watching streaming video services and advertisers spending more of their budgets on online ads.
Instead of considering TV adverts alone, a broader approach would cover the much larger digital advertising market, including giants such as Google, YouTube and Facebook, and mean that TF1 and M6 would not be so dominant.
If regulators approve of such an approach, analysts said it could trigger a wave of consolidation among European media groups. Bouygues and Bertelsmann have long argued that such consolidation is necessary for broadcasters to be able to compete with the likes of Netflix and Amazon.
Bouygues and RTL said they would inform the competition authority of their response within the next three weeks. Hearings before the competition regulators’ decision-making committee, known as the college, are still set for September 5 and 6.
While it is not unheard of for the college to take a different view than the authority’s investigators, it remains quite rare.
In a note titled, “The end of a beautiful dream,” Barclays analyst Julien Roch wrote that he “would be surprised if the [college] rules against the case team, therefore we believe that the merger is very unlikely to happen.”
The competition regulator declined to comment.
