German broadcaster ProSiebenSat.1 and German publishing house Axel Springer have reignited talks for a merger, seeking to consolidate their push into digital media, two sources familiar with the matter said on Monday.
Axel Springer, the publisher of Europe’s best-selling tabloid Bild, and ProSieben, broadcaster of mass-market hits like Germany’s Next Topmodel, are both racing to adapt to rapidly changing markets.
Springer had tried to buy ProSieben a decade ago but the deal was blocked by competition authorities and also media watchdog KEK, which feared the combined company would have too much influence on public opinion.
The groups’ combined market capitalization is about 14.43 billion euros ($15.95 billion), with ProSieben’s the larger at around 9.8 billion.
"There is the intention, but talks are at a very early stage," one of the sources said. News of the merger talks was first reported by the Wall Street Journal, which cited sources saying the two companies were considering a deal with ProSieben the senior partner.
The WSJ report said the talks could still break down and would likely face regulatory scrutiny.
As consumers increasingly use smartphones and tablet computers to watch videos and listen to music, traditional broadcasters such as ProSieben and RTL are expanding their online media offerings to better compete with the likes of Netflix, Amazon and HBO.
Meanwhile, Springer is moving away from solely traditional print publications towards digital products, following the New York Times, News Corp.’s Wall Street Journal and Pearson’s Financial Times.
The deal makes more sense now than 10 years ago because the two have complimentary digital businesses and ProSieben’s advertising power could help to stem a decline in sales at Bild, a second person familiar with the talks said on Monday.
Springer last year won a legal battle against the KEK when Germany’s federal administrative court ruled that the merger would have been unproblematic from a media point of view.
In early 2014, Springer bought German news broadcaster N24, which also produces the news programs for ProSiebenSat.1′s channels ProSieben, Sat.1 and Kabel Eins.
In the first-quarter of this year, Axel Springer made 63 percent of its revenues and 73 percent of its core profit from digital products.
Axel Springer is majority-owned by Friede Springer, the widow of the company’s founder and owner of about 57 percent of the publisher, according to the company’s website.
With an estimated net worth of $3.4 billion, she is Germany’s 25th richest person, according to Forbes.
ProSieben shares closed at 44.43 euros on Monday, while Springer closed at 47.29 euros.
ProSieben and Axel Springer declined to comment on Monday evening.