Axel Springer, the German publishing group, yesterday threatened to walk away and invest overseas after the country's media watchdog blocked its agreed €2.5bn (£1.7bn) takeover of ProSiebenSat.1, Germany's biggest commercial broadcaster.
KEK, the media regulator, said the merged entity would have too much sway over public opinion - equivalent to 42% of the German audience. It said Springer and its target had rejected the idea of selling off one of the two main TV channels.
Its decision, reached after talks with both companies yesterday, is expected to be confirmed by Germany's federal cartel office next week and could pave the way for Springer to expand abroad.
The group held out the dim prospect of appealing over the heads of the regulators to regional authorities controlling broadcasting or to the economics minister, Michael Glos. It has until tomorrow to persuade the cartel office.
Springer said it was exploring "other options". Thwarted in its attempt to buy the Telegraph newspapers in Britain, it has been cited as a would-be suitor for Trinity Mirror, publishers of the Daily Mirror and regional titles, and is keen to grow outside the tightly-regulated German market.
It has been desperately seeking a way out of the impasse posed by regulators over its planned takeover of ProSieben, controlled by US media investor Haim Saban, and agreed the €2.5bn bid last August. It aims to challenge Bertelsmann, which controls RTL and Channel 5.
Rejecting proposals to sell either ProSieben or Sat.1, it is understood to have tried to allay fears about its over-dominance or the creation of a near duopoly in Germany by seeking a partner. TF1 of France, which once tried to buy ProSieben, and Luxembourg-based SBS, co-owned by private equity groups Permira and KKR, are said to have held talks.
Springer offered to sell some of its TV magazines and ensure its newspaper and TV businesses were kept at arm's length of each other, but the group, which publishes the conservative daily Die Welt, turned down a proposal to sell off Bild, Germany's biggest-selling daily tabloid.
Mathias Döpfner, Springer's chief executive, yesterday lambasted regulators for imposing impossible conditions out of outdated misconceptions about the modern, global media landscape. "What they've overlooked is a global shift in media competition into digital distribution markets - as though that were some kind of delusion of new economy yuppies gone wild. This opinion is not only false, it's negligent." He poured scorn on the notion that Springer, a seventh of the size of Bertelsmann, could form an equally powerful half of a duopoly squeezing out competition.
Mr Döpfner added that even the most comprehensive disposal proposals to address its concerns were turned down by KEK within hours of being handed in. "One has almost the impression that even if we were to propose selling off the entire Axel Springer publishing house they would nevertheless forbid us to take over the TV broadcasters," he said.
He accused the watchdog of dreaming up new models for assessing market share by adding together print and TV market shares, and of putting forward plans for a new oversight body that "would make the GDR [communist East Germany] appear like a liberal economic paradise."
Springer's increasingly desperate search for a way out of the impasse, reports said, is partly occasioned by an agreement with Mr Saban and his co-investors in ProSieben to pay daily interest up to €50m if the deal is delayed. But the US investor could decide instead to seek another buyer, especially as ProSieben shares have been rising dramatically.
