Investment bank Credit Suisse said that regulatory approval is unlikely to be forthcoming should the pair push ahead and attempt to merge.
“Given the combined ad market share (we estimate 20% of total German market) and potential enhanced power over advertisers, we think they would struggle to get approval from the Cartel Office – at least without concessions,” the bank noted. It added that German regulators blocked an earlier attempt by Axel Springer to take over ProSieben in 2005.
The new deal, which has not been officially announced but was reported in the Wall Street Journal, would see ProSieben emerge as the senior partner “which would make sense from our perspective given it is double the market cap of Axel Springer”, Credit Suisse said.
The bank added that there is a clear strategic rationale for the two media firms to combine.
It said: “If true we would see this news as positive for both Axel Springer and ProSieben given the increased audience and reach, the incremental negotiation power over advertisers it would confer and the potential for enhanced digital growth as well as a bigger wallet to invest in content and further acquisitions.”
Credit Suisse added: “Any deal would enable Pro7 and Axel Springer to increase their size and unlock potential synergies between their digital assets as well as more effectively compete with larger international players (eg. Netflix, which launched in Germany late last year, is a direct competitor to ProSieben’s VOD product MaxDome, as is Amazon Prime).”
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