European media groups set to consolidate in streaming age, says Bertelsmann CEO

Regulators should allow European media companies to pursue mergers and partnerships if they are to stand a chance of competing with US streaming giants, said the head of one of the world’s largest television, radio and television groups. edition of the continent.

Thomas Rabe, managing director and chairman of Bertelsmann, told the Financial Times that the economic impact of the coronavirus on the industry had reinforced his opinion that there was a need to redesign the European media landscape.

“There is a strong case and a need for consolidation,” he said. “I am convinced that partnerships are more important than ever, especially after the coronavirus, which has hurt European broadcasters and helped American streaming platforms. “

Streaming services such as Netflix, Amazon Prime and Disney + have seen their subscriber numbers and revenues increase as blocks around the world have forced millions more to turn to online content.

Although audiences also increased among European TV channels for the same reason, these groups suffered a sharp drop in The advertisement. On Thursday, the Bertelsmann RTL Group division – Europe’s largest broadcaster – reported a 16.4% drop in revenues to 2.7 billion euros in the six months to June. Net profit fell 65% to 156 million euros.

Shares of RTL, which is the only listed part of Bertelsmann, have fallen almost 40 percent since the start of the year.

Mr Rabe, who also chairs RTL, has not offered an annual forecast indicating that conditions remain unpredictable due to the pandemic, although he believes future lockdowns are more likely to be local than national, as governments are focused on rescuing their struggling economies.

But he added that the rise of American streaming services will be a challenge that will survive the crisis, and urged European regulators not to adopt strict interpretations of competition law in order to take into account a new era. competition.

“We should be allowed to create national television champions,” he said, adding that RTL was “open to exploring such possibilities” in the markets where it operates. Luxembourg-based RTL operates TV channels and radio stations across Europe, including Germany, France, the Netherlands and Spain.

The EU generally views mergers that lead to a combined market share of over 40 percent as potentially problematic, meaning companies like RTL could raise antitrust concerns with any potential merger.

RTL’s subsidiaries also sell some of their programming to Netflix with its production company, Fremantle, selling 90 percent of its content to third parties, including the streaming service.

Mr Rabe defended this strategy, saying RTL’s broader goal was to become “the number one local streaming service” in the countries where it operates. The group has 1.77 million subscribers on its streaming services in Germany and the Netherlands and wants that number to reach between 5 and 7 million.

He cited research suggesting that European consumers were likely to subscribe to packages that also offered national streaming services, in order to receive local news and sports programs.

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