Changing German TV. Saban's sticky stake.

It would not quite have been German TV if there hadn't been a surprising turn. After the German cartel authority turned down German publishing house Axel Springer's takeover of German commercial TV conglomerate ProSiebenSat.1 Media out of fear that the publisher would gain too strong an influence over public opinion, the investment group (lead by Haim Saban) has decided to keep its stake ... for the time being.

A consultant close to the Saban and Springer parties said that this was a good choice for Saban. At a point in time when business projections couldn't be better, it would have been a mistake to have other bidders around, slowing down the group's dynamism. Saban, on his part, probably figured that if they were to wait a year, they'd make even more money from the stake.

The list of buyers interested in ProSiebenSat.1 is long. French commercial TV network TF1 is said to be interested, and General Electric, owner of NBC Universal, is known--or at least expected--to be looking for broader access to the German TV market. But, they will have to wait.

Springer, which isn't expected to carry on with the deal, filed a complaint with the courts, saying the cartel office's decision was not in line with the law. "If this decision remains as it is, this means we will be stopped forever from buying into any other venture and grow our business," said Springer CEO Mathias Doepfner.

Springer still had the chance to appeal to the federal government to get special permission from the Secretary of Economics. In fact, the current secretary was said to favor such a Ministererlaubnis (or "secretary's permission").

But even so, the obstacles wouldn't have ended there. The current federal government is a coalition of the two major German parties--the Christian Democrats and the Social Democrats. While the secretary of Economics, Michael Glos, is a Christian Democrat, the co-rulers from the other party are said to highly oppose special treatment for Springer. And there is a general belief running rampant that "certain things are better left untouched."

There seems to be some truth to Doepfner's pessimistic outlook on the future of business growth within Germany as a result of the cartel office's decision. Shortly after the Springer/ProSieben decision, the cartel office was said to be unwilling to accept RTL Group's purchase of the remaining 50 percent stake in German news channel n-tv. For the last couple of years, RTL shared stake in the channel with Turner Broadcasting. Additionally, RTL's long-desired full takeover of RTL2 (two-thirds of which now belongs to German publishing house Bauer and a joint venture comprising of TeleMunchen Group and Disney) now seems to be more distant than ever.

So, the outcome of Springer's current court complaint has had an impact on the entire German media business.

"Regardless of the ongoing debate on Springer's publishing strength, it's a pity we can't develop any schemes that allow us to foster a German solution," said Wolfgang Thaenert, general director of regional regulator LPR-Hessen, who until last year was the speaker of the regional media regulators director's board, DLM. "We need to stop opening our doors to foreign investors such as TF1 or the U.S. investment funds," he continued.

In a recent interview, the CEO of German pay-TV platform Premiere, Georg Kofler, expressed his interest in investing in ProSiebenSat.1. Some analysts doubt the seriousness of this claim, though. Many think he was just referring to the possibility of a merger between Prosieben and Premiere.

There might even have been some interest by Saban's group to increase its ProSieben asset value by merging it with Premiere, but now these merger plans have been thwarted too, for the same reasons the Springer takeover was rejected.

Additionally, the tide has changed for German pay-TV platform, Premiere, after it failed to acquire German First Soccer League rights for the next three years. Because most of Premiere's approximately 3.5 million subscribers are interested in sports highlights--Premiere owed much of its past success to its airing of the Champion's League and the World Soccer Championship games--its share price dropped by almost 30 percent after losing the rights.

Replacing Premiere, then-unknown cable operator Arena won this valuable pay-TV asset. Arena is a subsidiary of German cable operator Unity, which operates the Level 3 cable networks in Hesse and North Rhine Westphalia, reaching some 5.2 million homes.

By next August, when the new soccer season launches, Arena will have had to receive its license, set up studios and a staff. This tight time frame, is likely stirring up Kofler's hope to share the games.

Kofler's Premiere TV net was left out of the equation despite the fact that he offered more money than his competitor, because of his demand that public broadcaster ARD not start its highlight show while the games were still running. The games' rights owner, the DFL, frevently objected to that.

Some observers believe that in the end, there will be some splitting of the soccer nights between Arena--which is owned by Unity via capital investors lead by Apollo Capital Management--and Premiere. This projection is fed by the knowledge that financial investors are always looking for a more or less foreseeable return.

However, if the Unity investment proves anything, it is that the cable business intends to become a serious player in German entertainment. In order to foster triple-play services, you need attractive content to make your platform appealing to digital subscribers. While Premiere succeeded, the pay bouquets of German cable operators ended last year with only around 300,000 digital subscribers.

Soccer provides the chance to significantly increase this number this year. And the consolidation process indicates that that cable operators are serious about doing just that. The largest German Level 3 operator, KDG--reaching about 10 million German cable homes--was just wholly acquired by Providence Equity Partners, which bought out its co-investors at the end of last year.