Thomas Rabe, the chief executive officer of European broadcaster RTL (as well as its parent company Bertelsmann) wants to have a second attempt at merging RTL-owned French broadcaster M6 with rival TV group TF1.
The two broadcasters agreed a merger back in 2021, in a deal which would have brought together France’s two largest privately-owned TV stations. The deal was abandoned the next year, however, essentially scuppered by France’s competition authority.
But in an interview with the Financial Times, Rabe said that an apparent change in the European Union’s thinking towards regulation and competition opens up the possibility that such a merger could now be approved. In Rabe’s eyes, the logic behind the merger still holds: “it would create a true French TV and streaming champion, able to compete with the US platforms,” he told the FT.
TF1’s parent company Bouygues Telecom is also open to revisiting the merger, according to the FT, so long as legal and regulatory conditions permit it.
Take two
Rabe has long been one of the most vocal proponents of consolidation in the European TV market. But unlike Italian TV giant MFE MediaForEurope — which has also touted the importance of consolidation, focused on bringing together TV businesses across different European markets — Rabe has called for mergers within markets.
In doing so, he has also acknowledged the need for regulators to soften their stance on TV mergers. In 2020 for example, he floated the idea of a merger between RTL and ProSiebenSat.1, both of which are major players in the German market. But he said that such a merger would likely be blocked by competition authorities.
With the merger deal previously agreed between TF1 and M6, both parties had hoped that regulators would see the merger within the wider context of the global advertising market. French broadcasters are increasingly competing with international streaming giants for TV spend specifically, while the major tech platforms like Google and Meta continue to hoover up an increasing share of total ad spend, impinging on the TV ad market in the process.
Indeed, these factors were framed as the primary motives for the merger when it was initially announced. “The consolidation of the French television and audiovisual markets is an absolute necessity if the French audience and the industry as a whole are to continue to play a predominant role in the face of exacerbated international competition, which is accelerating rapidly,” Nicolas de Tavernost, M6’s CEO at the time, said in a statement announcing the agreement. “The combination of the two groups’ know-how will allow for an ambitious French response.”
It was telling that even Delphine Ernotte, president of fellow French broadcaster France Télévisions, lent her support to the deal. Speaking at a Senate hearing, Ernotte said that if TF1 and M6 believe they need to merge to stay in good shape, they should be allowed to do so, adding that more should be done to protect France’s audiovisual sector from the financial might of international streamers.
But France’s competition body, it turned out, saw things differently. Hearings with the Autorité de la concurrence, made it clear that at minimum, either the TF1 TV channel or M6 TV channel would have to be divested, in order for the deal to pass. But both broadcasters felt that such a divestment would render the deal pointless, leading to its collapse in 2022.
Attitude adjustment?
Just a few years later, there are signs that a change in thinking within the European Union might open the door to a second attempt at the tie-up.
An influential report on European competitiveness last year from former European Central Bank President Mario Draghi suggested that stringent regulation may have hindered overall growth and competitiveness in the EU, signalling a change in EU thinking. Draghi’s report recommended a new approach to M&A, one which recognises that “big isn’t always bad”.
Since then, there have been further signs that change may be on the horizon. The EU has already announced some measures to reduce the regulatory burden around sustainability reporting and accessing EU investment, and Politico reports that the General Data Protection Regulation (GDPR) may also be trimmed back in the near future.
In this context, it does look more likely that competition bodies could give a merger between TF1 and M6 the green light. If that were to happen, it could spark a wave of consolidation elsewhere on the continent, from broadcasters looking to capitalise on a more lenient regulatory landscape.
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