Germany’s Federal Cartel Office has denied Liberty Media’s proposed acquisition of six regional cable tv companies from Deutsche Telekom AG. Liberty Media, which holds interests in Discovery, Court TV, Encore and STARZ!, bid US$4.8 billion, but wasn’t willing to upgrade the cable network to carry telephone and internet access as fast as the Cartel Office wished. This was considered an important aspect of the deal, as the upgrades would have helped create greater competition in those areas. In the end, the Cartel Office argued that the acquisition, which would have made Liberty Media the largest cable operator in Europe, ultimately worsened the outlook for competition.
Liberty Media announced it will not appeal the decision and will also terminate its bid to acquire Level Four cable systems from Germany’s TeleColumbus, because the purchase was conditioned on the completion of the Deutsche Telekom transaction. U.K.-based Compere Associates has also expressed interest in Deutsche Telekom.
Across the pond, a U.S. federal appeals court has struck down a regulation that restricts a single company from owning both a cable TV system and a local broadcaster in the same market. Unless the decision is overturned by the Supreme Court, it will likely set off a rash of mergers among media companies. Previously, large cable operators such as AOL Time Warner and Cox Enterprises were unable to own broadcast networks with TV stations. Likewise, broadcast networks such as Viacom-owned CBS and the News Corporation’s Fox, were hindered from further expansion. The appeals court ruling reverses these circumstances and cripples chances for more diversity in media ownership. Additionally, the decision brings into question a rule that prevents a single company from owning broadcast outlets that capture more than 35% of U.S. TV households.