Bertelsmann / IKO TV RTL cases - Case study

Transcription

1 Bertelsmann / IKO TV RTL cases - Case study OECD-GVH Regional Centre for Competition Advanced Level Workshop Analysis and Procedures of Complex Mergers Szabolcs Szendrő dr. Merger section, Senior Lawyer-Economist Hungarian Competition Authority (HCA) 15 May 2013

2 Agenda 1. Place of case historical background, broadcast developments, regulation 2. Challenges of two sided markets broadcasting VS advertising 3. Merger characteristics market power on TV advertisements 4. Portfolio and conglomerate effects tying concerns on advertisements 5. Commitment assessment

3 Place of Case Ancient ages - System change (1989) - From 1990: Media War Act I of 1996 Media Act 1997: Frequency tender of terrestrial broadcasting rights 1 Public Broadcasting Service (PBS) 2 Commercial TV channels

4 Place of Case II. RTL Klub Free-to-air (FTA) Analog terrestrial broadcasting State-wide penetration Restricted media rights (Act C of 2003) No further media products Significant market power model (SMP) Limited content Fixed time for news and certain contents Limited advertisement Notable position

5 Place of Case III. New Media Constitution Act CLXXXV of 2010 New rules according to 21 th Century: Developement of broadcasting networks Cable technologies (EuroDOCSIS 3.0) IPTV service Possibility for multiple TV packeges (growth of penetration) Presence of TV families (thematic channels) -> Permission for further TV channels

6 Two sides of the coin Value chain packaging TV Channel (media content) Saleshouse TV service provider Cable/IPTV/ Sat/Terr Viewer/Customer Media agency Advertiser

7 TV Groups Two sides of the coin I. Competitors M-RTL: RTL Klub MTM-SBS: TV2, FEM3, PRO4 MTVA (PBS): m1, m2, Duna, Duna Autonómia IKO/Rákosi: Sport Klub, Sport Klub+, Fishing and Hunting, DOQ (case of merger: Cool, Reflektor, Sorozat+, Prizma, Film+, Film+2, Muzsika TV) Viasat: Viasat3, Viasat6, Viasat Explorer, Viasat History Chello: Sport1, Sport2, Sport M, Minimax, MGM, Movies 24, Filmmúzeum, Spektrum, TV Paprika, TV Deko, a Zone Club, Zone Romantica, Zone Europa, Zone Reality, Extreme Sports, Jim-Jam; Discovery: Discovery Channel, Animal Planet, Discovery Science, Discovery Travel&Living, Discovery World Sanoma: Story 4, Story 5 NatGeo: National Geographic, National Geographic Wild Origo (Magyar Telekom): Ozone Network, Life Network MTV Networks: MTV, VIVA, Comedy Central AXN: AXN, AXN Sci-Fi, AXN History, AXN Crime, Animax HBO: HBO, HBO2, HBO Comedy, Cinemax, Cinemax2 SPI: Nickelodeon, Filmbox, Filmbox Extra, Filmbox HD, Filmbox + Digi: Digi Sport, Digi Sport + Tematik Kábel: Nóta Tv, PV TV (Peca-vadász TV), Musicmix

8 Two sides of the coin II. TV Groups viewer ratings (2010) 29% M-RTL MTM-TV2 Public Broadcasting Service IKO Viasat Chello Sanoma Other 22% 1% 3% 19% 6% 7% 15%

9 Two sides of the coin III. RTL on the stream RTL Klub is everywhere - FTA, Satellite, Cable, IPTV (all available) - Only 3 channels with maximized penetration - RTL Klub is always part of the basic packeges - Free broadcasting obligation

10 Two sides of the coin IV. Broadcasting market Several market players on transmission Few significant (UPC, DIGI, Telekom, Invitel, PR Telekom, Hello HD, Vidanet) Many micro companies (~20% total share) High level of vertical integration TV service providers have TV channels Favoring own channels Demand for multipacks All type of thematics involved (universal, sports, documentary, music, movie, cartoon, etc.) channels packages are favored

11 Two sides of the coin V. Advertising market TV is part of the media mix BUT: Crucial part of the mix Direct connection Intensive reach Having own relevant markets Specialized saleshouses must have channels Revenues share 2011 RTL Klub R-Time MTM-SBS Viasat Atmedia (Chello) Sanoma MTVA (PBS) ATV Other

12 Merger characteristics Two sides relationship Broadcasting Must Have (SMP), BUT: No broadcasting fees + must offer obligation (solely) Only one question left: For how long? Answer: Effect: Further than predictable Maintained market leader position Advertising - View rates VS Revenue share - Special advertiser goals - Agencies involved Sale-groups The more reach on broadcasting, the more essential on advertising! special targets direct reach well focused groups More complex

13 Merger characteristics II. Relevant markets on Advertising Two specified segments: Aspect Marketing function Reach builder channels - reach building - image advertisements, - high remembrance, - fast access Supplementary channels - supplememtary GRP function - repetition/frequency building - targeting - lower costs Reach (daily) ~ 50% under 20% Coverage % under 75% Viewer rating (SHR 18-49) 17-21% under 5% Revenue share: advertisement VS transmission fee 99% (no fee) Under 50% (except: Viasat, PBS)

14 Merger characteristics III. Merger specific issues RTL Klub and New Channels are not on the same relevant market Only two of reach builder channels: RTL Klub and TV2 Constituting market power (must have at media campaigns) Additional share on thematics Leverage transfer from RTL Klub to New Channels (via R-Time) Owner Seller Channels Shares out of Shares on TV advertising supplementary channels GRP Income GRP Income M-RTL M-RTL RTL Klub [30-40]% [40-50]% - - IKO (new channels) R-Time Cool, Reflektor, Sorozat+, Prizma, Film+, Film+2, Muzsika TV [10-20]% [0-5]% [20-30]% [10-20]% M-RTL / IKO M-RTL / R-Time Parties together [40-50]% [40-50]% [20-30]% [10-20]% AXN, Discovery, DOQ, Sport Third parties Other R-Time Klub, Fishing&Hunting, Life Network, Ozone Network [0-5]% [0-5]% [10-20]% [10-20]% M-RTL / IKO / Third parties M-RTL / R-Time Parties + R-Time together [50-60]% [50-60]% [30-40]% [20-30]%

15 Merger effects Competition concerns 1. Significant widening of market presence 2. Cross-media and cross-promotion 3. Tying of commercial surfaces a. Simple tying b. Share deal incentives c. Agency bonus 4. Cross-financing

16 effect cabability incentive Merger effects Portfolio widening Conglomerate Theory Of Harm (TOH) Two types of channels create complementer No need for further channels in TV campaign Tying could lead to unique incentives reach frequency Several ways for abusive tying option: Direct action Indirect action share deals bonus methods Competitor exclusion discrimination excessive discounts

17 Commitments 1. Non-discriminatory and separate sale offers on RTL Klub and New Channels (R-Time) 2. Tied sales restriction Separate sales cannot be less attractive overall Tied sales have to be reasonably comperable to third party s packages (certain combinations) 3. No discount for summarized Agency volumes 4. Detailed documentation for future control 5. Limited duration for commitments (2 years)

18 Commitments Requirements 1. Necessary 2. Proportionate 3. Effective 4. Controllable

19 Commitments assessment Competiton concerns could be settled by: Only reasonable incentives for RTL and R-Time combinations (eg. Agency bonus, excessive discounts) Granting floor for third parties similar packeges Equal offers for different groups (non-discrimination) Ensure effective control system BUT: no aim on restricting effectiveness improvement! Both solved Merger passed

20 Thank you for your attention! Contact: 1054 Budapest, Alkotmany Str /