Still, the decision to remove the tie in the face of regulatory backlash suggests budding media empire builders face an ugly plot twist at a time of a slowing economy and accelerating inflation. There’s a warning here for more deals across the US and Europe being promoted as a blow against Big Tech.
To say that a merger could hypothetically harm Jeff Bezos fails to convince regulators to focus on a more concrete outcome: a TF1-M6 combination would have accounted for 70% of the television advertising market in France. This is a real risk of less competition and higher prices.
These companies are obviously not booming: M6 and TF1’s revenues last year were broadly the same as a decade ago, and their combined market value is just under 3 billion euros ( $3 billion). Yet they are profitable. To consider these two minnows of the advertising market would have required a Copernican antitrust revolution – largely considering that Alphabet Inc.’s YouTube video ad market is the same as TV ads on a show like “Survivor”. It didn’t happen and the status quo won out.
Bad timing added to bad economics. Digital platforms are powerful, but they no longer seem invincible. The post-Covid reopening has taken eyeballs off smartphone screens and seen less affluent consumers cut online subscriptions (not just cable). It’s even seen more traditional ads do relatively well, as Liberty Sky Advisors’ Ian Whittaker points out. Interest rate hikes have dented tech valuations.
The passage of time has played against the apparent urgency of the deal. A more fragile-looking Macron is grappling with a turbulent parliament and unpopular pension reform plans and is less likely to start a new fight for media concentration. The companies’ promise to keep their ad businesses separate has failed to sway regulators. Bertelsmann SE, for which the sale of M6 is a strategic stepping stone to other deals – such as the merger of its publisher Penguin Random House with Simon & Schuster – has publicly warned of a “fallout” if the deal is rejected.
More broadly, the political winds have shifted since Russia invaded Ukraine. Instead of encouraging the emergence of industrial champions at all costs, governments are focusing more on protecting jobs and controlling prices. It puts antitrust authorities, who are keen not to compound past mistakes by letting huge tech empires build under their noses, in a good light — and businesses like Simon & Schuster in a bad light.
All is not hopeless for media companies keen to catch up with these digital giants. There is no doubt that lobbying will intensify for tougher rules on technology platforms, such as those recently adopted by the European Union aimed at loosening Big Tech’s grip on the digital market and improving police content. .
Yet whether it’s the prospect of an alternative buyer for M6, or the long-term prospects for a standalone TF1, or other deals across Europe in the hope of reducing the number of players in the broadcast market, things are about to get complicated. They’re still trophy assets for billionaires – but turning them into giants will have to wait.
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This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.
Lionel Laurent is a Bloomberg Opinion columnist covering digital currencies, the European Union and France. Previously, he was a reporter for Reuters and Forbes.
More stories like this are available at bloomberg.com/opinion