Monday, November 21, 2005

The Springer question

The Financial Times reports:
Germany's cartel office has raised the chances of a foreign bidding war for the country's second-largest private broadcaster by warning Axel Springer, the newspaper publisher, that it has grave concerns about the proposed takeover of ProSiebenSat1.
The monopoly watchdog informed Springer late Friday that "the conditions for the prohibition of the merger are given" as it would split the German TV advertising market between it and Bertelsmann, which owns market leader RTL.
What the story doesn't note is that at least part of this "grave concern" stems from political motives, as the Wall Street Journal pointed out (via Davids Medienkritik) when the deal was announced:
German democracy is under attack. At least that is what a flock of the media elite has been claiming since Axel Springer, Germany's largest newspaper publisher, said Friday it would buy ProSiebenSat.1, the country's second-largest broadcasting group. This "cannot be in the interest of democracy," said Michael Konken, the chairman of Germany's journalist association. Frank Werneke, a trade union leader, called for "the containment of media power across sectors."
These concerns would sound more sincere if they also had been voiced four years ago when Bertelsmann, the world's fourth-largest media company, took control of RTL Group, Germany's largest broadcaster. But back then, there were no such warnings about democracy's imminent decline. Bertelsmann's outlets are more to the liking of the German left.
Let's look at some of the facts. Although the acquisition will nearly double Springer's sales to about €4.2 billion, Bertelsmann still dwarfs its competitor, with global sales more than four times higher. Bertelsmann's German business alone still outpaces its rival with about €5 billion in sales. RTL is slightly more popular than ProSiebenSat.1 but neither broadcaster reaches 25% of the German audience -- the ceiling regulators have set for combined print and television companies.
The principles Springer journalists are expected to support are freedom and democracy in Germany and efforts to bring the peoples of Europe closer together; reconciliation between Jews and Germans, which includes support for Israel's right to exist; the trans-Atlantic alliance and the liberal value community with the U.S.; the rejection of totalitarianism and the defense of Germany's free, social-market economy.
What sounds like a manifesto that any reasonable democrat in Germany should be able to sign is now being called a threat to the country's democracy. Without doubt, the company's commitment to the trans-Atlantic relationship is what irks its opponents the most. Springer publications often criticize U.S. policies but its readers will not find the kind of hysterical anti-Americanism now so prevalent in much of Germany's media.
Meanwhile, Wolfgang Münchau writes in today's Financial Times that it is the disastrous foreign policy of Gerhard Schröder, so strongly (and dishonestly) peddled by Bertelsmann's media outlets, that has put Germany in its worse strategic position of the post-War period:
When Gerhard Schröder became chancellor in 1998, he altered both elements of the doctrine. He was never an instinctive European. During his seven-year term in office he failed to build effective alliances in the EU and picked numerous fights, especially with the European Commission. At the same time, German foreign policy became gradually less transatlantic. Mr Schröder's decision to exploit anti-American sentiments during the 2002 election campaign has done lasting damage to US-German relations.
Mr Schröder has said frequently that under his leadership Germany has turned into an "emancipated" mid-sized political power. I would argue that, on the contrary, Germany is politically less relevant today than at any time since the second world war. This decline in power is to a large extent the result of his catastrophic foreign policy.
All in all, the style of German foreign policy will probably change for the better. The real question is whether this matters. There are four reasons to think that it might not.
First, during the Schröder years, public opinion in Germany has turned progressively more anti-American. Iraq may have been the trigger for this development but the trend had already set in before September 11. The change in sentiment towards the US was probably more pronounced in Germany than in any other European country. Turning back the clock on transatlantic relations would have to involve more than subtle diplomacy.
Second, there will be just as many substantive disagreements with Washington, if not more, under the new government. Germany will still not be sending troops to Iraq. Ms Merkel and Mr Bush disagree on a whole range of issues, from climate change to Turkish EU membership.
Third, the German political class has become far more inward-looking since unification. Domestic politicians such as Mr Schröder have often portrayed the European Commission as an institution infested with Anglo-Saxon libertarian zealots who are out to destroy German industry.
Fourth, and perhaps most importantly, Germany's persistently disappointing economic performance will act as an over-arching constraint on the effectiveness of any foreign policy. An economically feeble Germany is going to be politically feeble. In the long run, the best foreign policy would be to sort out the economy. Yet this is not what the grand coalition will do.
In spite of all this, a new style of foreign policy may still achieve something. But it would be a mistake to expect too much of Germany's new chancellor.
I wish he was wrong, though I doubt he is.
At any rate, returning to the Axel Springer question, the amusing result of blocking the merger is probably going to be even less pleasant for the anti-Americans in the German intelligentsia:
This would open the way for a possible bidding war between foreign rivals. Rupert Murdoch, the media tycoon, in February denied he wanted to take over ProSieben. But German industry observers have said that his company, News Corp, and US rivals Viacom and General Electric, all had a look at the company before Springer made a bid.
Should Mr Döpfner apply for special permission from the government, Angela Merkel, the new chancellor, would have to choose between overruling her regulator and opening the door to foreign media players.
Though I prefer Mr. Döpfner, I'm not going to complain if Mr. Murdoch acquires ProSiebenSat.1 instead. Actually, I think Rupert is more hands-on politically, which can only be a good thing, considering the German media-market's lamentable and mindless anti-American consensus.

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