Mediaset taking a tenth of ProSiebenSat.1 is just the start

Oh how we’d relish being a fly on the wall at the headquarters of Vivendi and its Italian TV subsidiary Mediaset, although at our own risk given this week’s frenzy of activity. Just as Vivendi’s Canal+ submitted an audacious $1.1 billion bid for M7 Group (see separate story in this issue), days later Mediaset took a run at ProSiebenSat.1 – buying a 9.6% stake. The French mass media firm is renowned for its hostile takeover procedures and the German broadcaster will be hoping Vivendi doesn’t drive Mediaset to similar extremes.

The fact Mediaset’s CEO Pier Silvio Berlusconi (son of the country’s former PM) had to emphasize “the friendly acquisition of a stake in ProSiebenSat.1” is disconcerting in itself, considering Mediaset was recently forced to deny rumors it was holding talks to merge with ProSiebenSat.1.

Not only that, but Mediaset is wrapped up in cross-border controversy as it attempts to whip up a Europe-wide anti-Netflix initiative with neighboring broadcasters. It also comes just a few weeks after the Italian regulator unexpectedly blocked the acquisition of Mediaset’s pay TV services and technology unit R2 by Sky Italia. There have also been reports Mediaset will consolidate ownership of its Spanish operation as a first step towards this elusive pan-European broadcasting powerhouse. No question about it, any fly on the wall within recent weeks would have been caught in the crossfire and obliterated by now.

Significantly, the acquisition of one tenth of ProSiebenSat.1 for an undisclosed fee makes Mediaset the largest shareholder in the German broadcaster and will give the Berlusconi family the voting power it needs to channel resources into a Netflix competitor. The plan isn’t to take Netflix on at its own game with a competing OTT video service, however, but to carve out a dominant position in the free-to-air TV market and steal eyeballs away from Netflix doing what broadcasters do best. That is certainly optimistic, although surely a streaming service must follow, particularly with Mediaset recently conceding that OTT-only was the inevitable fate of its DTT operations.

It is definitely true that ProSiebenSat.1, Mediaset, the UK’s Channel 4, Greece’s Antenna Group, Portugal’s Impresa Group and TVN Discovery Poland have reiterated their commitment to use the European Media Alliance (EMA), which was formed about five years ago, as a platform for joint initiatives in video streaming, technology, and monetization. The EMA is really about selling pan-European programmatic online video ad campaigns.

Globally, most FTA TV services were once under the impression they could not ask for cash for putting their TV online in the past. But after watching the US come up with such a strategy through CBS, Fox, Paramount and WarnerMedia, this has tempted RTL and ProSiebenSat.1 to changes monetization policies. These broadcasters now realize that much of their content – strong US programming, plus strong German content – will end up in SVoDs on their territory if they don’t use it. They plan to charge small amounts, say €2.50 a month for this. This is the beginning of freemium in Europe, which we feel will be relatively unpopular.

Of course, Vivendi threw a spanner in the works of Mediaset’s European FTA project when discussions collapsed due to litigation relating to Vivendi’s aggressive share-grabbing in the Italian broadcaster.

ProSiebenSat.1 has clearly been more willing to embrace SVoD than its new shareholder, having entered discussions with Discovery to host a merged SVoD offering in Germany, and last summer the German public broadcaster invited rival channels to jump on board. ProSiebenSat.1 owns Germany’s largest VoD library Maxdome, with over 50,000 titles and 1 million regular viewers, which will become an integral part of the joint venture with Discovery’s Eurosport Player 7TV. How Mediaset influences this project could make for intriguing viewing in an increasingly turbulent journey.

“The rapid process of globalization that is determining the international scenario is such that European media companies like us need to join forces if we are to continue to compete, or even just resist, in terms of our European cultural identity’s eventual attacks by global giants,” added Berlusconi in his call-to-arms statement.