Media firms in Germany

The Axel-Springer Verlag is the largest newspaper publishing house in Europe, with an annual turnover in excess of four thousand million Marks and has 23.3% of the market in German daily newspapers, including full ownership of the Bild-Zeitung, Die Welt, the Hamburger Abendblatt and the Berliner Zeitung, as well as substantial shares in newspapers in the former GDR, in Austria, Hungary and the Czech Republic, and in the commercial TV station SAT-1. 35% of the shares in the Axel-Springer-Verlag are owned by Leo Kirch, whose primary business was in film rights, but who has in recent years invested heavily in the Digital Television venture DF1

By far the largest media concern in Europe and, according to recent figures, the second largest media concern in the world, second only to Time-Warner, is the Bertelsmann group, based in Gütersloh, with an annual turnover exceeding twenty thousand million Marks. It has long had substantial holdings in book, and magazine publishing, and in 1995 it helped finance a takeover of the Luxemburg firm CLT by Ufa Film- und Fernseh-GmbH, in which Bertelsmann has a 87.5% stake. Now CLT owns 49.9% of the shares in RTL, Germany’s front-ranking TV station in audience quota and advertising revenue terms, and Ufa owns a further 37.1% of RTL. So this merger effectively gave the Bertelsmann group an 87% share in the country’s most popular TV channel. It also owns 74.9% of the publishing concern Grüner & Jahr, which in turn publishes nearly 60% of the weeklies sold in Germany, including Stern, Brigitte and Geo, as well as the daily Hamburger Morgenpost, Germany’s second ranking tabloid.

 Unlike the other firms so far mentioned, the Burda-Verlag, with an annual turnover of around 1.5 thousand million Marks, is wholly in the hands of a single family. It publishes, among others, Focus (the only illustrated news magazine that has had any success in rivalling Der Spiegel) Bunte, and the brash Super-Illu weekly aimed firmly at the Eastern German market. It was the first big German media concern to venture into full-scale on-line service provision with Europe Online, which went into receivership in 1996.

Legislative attempts to control media ownership

The "solution" most frequently offered to the problem of undue influence of owners and advertisers on the editorial content and style of their publications is to advocate legislation to make sure that there is plurality and variety of ownership: that way, even if individual publications come under undue influence from their owners their bias should be offset by the different priorities and policies advocated in the press organs controlled by their business rivals, and the public will consequently still have access to a range of different viewpoints across the press as a whole. That sounds promising at first, but there are serious snags. First of all, most people who have made lots of money out of press and want to make more have remarkably similar political values and agendas, despite their personal and commercial rivalries, so that a plurality of "media barons" does not guarantee a wide spectrum of opinion across the publications they control. But beyond that, the realities of business finance and ownership in a complex modern economy mean that is it extremely difficult even to track down the true ownership of media concerns, let alone enforce restrictions on that ownership that do not violate rights of property, privacy and freedom of choice.

The "social-liberal coalition" governments of Brandt and Schmidt in the late 1960’s and early 1970’s did try to legislate against concentration of press ownership, but their proposals for a Federal Presserechtsrahmengesetz that would have required the Länder to pass laws preventing the further expansion of press conglomerates or even breaking up existing ones never got very far: they were hampered as much by doubts within the governing parties about the enforcibility of any such legislation as by the adamant opposition of the newspaper publishers themselves. The only significant measure actually taken by the SPD/FPD coalition government was a change in 1976 to the law on Competition to make its provisions apply more strictly to the press than to other sections of the economy. Before the 1976 amendment, only planned mergers or takeovers that involved companies with an annual turnover of more than 500 million marks had to gain the prior approval of the Bundeskartellamt (the German equivalent of the UK’s Monopolies and Mergers Commission). The 1976 amendment left this figure as it was for most branches of trade and commerce, but introduced a special provision for proposed mergers or takeovers affecting the press, where the turnover threshold for requiring approval by the BKA was set at the much lower figure of 25 million marks. Other media were not cpvered by this change, since there was then no commercial television in Germany and it was the policy of the Brandt and Schmidt administrations to prevent the establishment of commercial broadcasting altogether. The BKA has in fact shown itself generally unwilling to object to mergers where the survival of a newspaper would be threatened if the merger did not take place. One of the few exceptions occurred in 1981, when the BKA vetoed an attempt by the Burda publishing group to take a 25% stake in the Axel Springer Verlag. Nevertheless, two years later and with a CDU/FDP government now in office, the Burda Group was allowed to acquire 24.9% of the Springer shares (this holding was bought back by Springer’s heirs in 1989). Matters have since been enormously complicated by the arrival of commercial television - long delayed in Germany, but explosive when it finally came about - and the burgeoning of on-line information services and the Internet, since all the proprietors of the print media are more or less heavily engaged in these so-called "New Media" as well, making the grip of commercial interests over the provision of information both more powerful and even more difficult to pin down, let alone control by legislation. Nevertheless, there have been serious, but not particularly successful, attempts to place broadcasting under legislative scrutiny and public control of a kind to which the print media in Germany have never been subject, and so far commercial rivalries and market uncertainties have prevented any of the major media concerns from establishing a significant position in the provision of on-line services.

Getting online

The ability of virtually anyone to publish anything they like  on the Internet is not only a worry to politicians and cultural critics: the media giants see a threat to their profits, as well as an opportunity for new areas of business. Their response in Germany has been to try to establish themselves as "content providers" (as contrasted with "access providers"). An "access provider" simply provides the necessary facilities for people to get on to the Internet (dial-up modems, email storage and forwarding, DNS facilities) whereas a "content provider" actually offers (for a price, generally measured by the hour on top of connection charges) editorial content or dedicated information services of one kind or another to w hich only subscribers have full access. Putting this principle into business practice has proved difficult, however. In the USA, CompuServe, a "content provider" long predating the Internet (it used to offer its own dial-up system which granted access only to its own services and those of its customers) was in effect put out of business by its slowness to recognise that people would not pay large sums for a restricted service when the WWW was making more information available at a much lower cost. Microsoft made a similar costly mistake, attempting to launch MSN in mid 1995 as an alternative to Internet provision (and a rival to CompuServe) then making a dramatic U-turn towards Internet provision in the autumn of the same year when customers failed to materialise, despite the heavy selling of MSN subscriptions in the launch editions of Windows 95: in the US versions, new users with modems were automatically subscribed to MSN as part of the installation procedure of WIN95, but one of the most common questions asked in the early days of WIN95 was how to get off MSN. Deutsche Telekom made a similar about turn with its T-Online service, initially an ailing and heavily subsided Teletext service like the long-since defunct Prestel service in th UK, then restructured by the newly-independent Deutsche Telecom to aspire to being  a German equivalent of the old-stlye CompusServe, but now offering Internet access alongside in-house content. This has allowed T-Online to survive, and profit from, the expensive failure of the first German attempt at commercial on-line service provision, the Burda family's Europe Online, which has made investors very nervous and led the other major media players (especially Springer and Bertelsmann) to waver between attempts to minimise their risk by negotiating a joint service and maximise their   potential profits by beating the other publishers to market with separate provision. Some of these shifts of policy and planned alliances are reflected in the links provided.

A new problem looms. The unclarity over the provisions of the IuKDG and the Mediendienste-Staatsvertrag makes Germany the most problematic of all European countries for anyone trying to establish an on-line venture, since the law contains the basis of endless disputes and there seems to be no basis in public opinion for a further clarification that would enjoy consensus. The Länder, after insisting on being granted licensing and regulatory powers over some aspects of on-line services on the analogy of broadcast media, are now unsure about whether and how to exercise their theoretical authority. They see their licensing and regulatory powers as a source of political influence, tax revenue and job-creation in their regions, but this will not come about if the new legislation drives on-line providers off German territory altogether, as the technology of the industry makes it very easy for them to do.

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