Two major TV deals this past week — ITV Studios’ acquisition of a majority stake in The Gentlemen producer Moonage Pictures and MediaForEurope’s takeover bid for German broadcaster Pro7Sat.1 —highlight a hard truth for Europe’s legacy networks: It’s grow or die.
Europe’s traditional TV powerhouses are scrambling to build scale to survive the onslaught from the global streaming giants who are eating into their audience share and shrinking their profit margins. Across the continent, once unassailable regional champions are suddenly vulnerable.
Take Pro7Sat.1. The Munich-based broadcaster booked operating (EBITDA) profits of more than $600 million (€557 million) last year and saw revenues inch up slightly, to more than $4.2 billion (€3.9 billion), but TV ad revenue was down for their third year running, slipping around 5 percent to $1.6 billion (€1.47 billion). So when its leading shareholder MediaForEurope (MFE), the pan-European broadcasting group controlled by Italy’s Berlusconi family, launched a takeover bid for the roughly 70 percent of the network it doesn’t already own, it was a lowball. The offer, which valued the broadcaster’s stock at around $1.4 billion (€1.3 billion) was the minimum price allowed under German law.
“The bid won’t succeed, it’s not designed to succeed,” says François Godard, a market analyst with London-based Enders Analysis, who argues MFE would prefer to wait until Pro7 sheds some of its non-core assets — the company is trying to offload its e-commerce and online dating ventures — before buying the network outright. “But MFE will eventually take control of Pro7. At the European level, consolidation is inevitable.”
As outlined by Pier Silvio Berlusconi, son of the late Italian prime minister and media mogul and CEO of MediaForEurope, MFE’s strategy is to buy up TV networks across Europe to achieve economies of scale in the advertising market. If they get big enough, the argument goes, they can compete for ad dollars with Netflix, Amazon and YouTube in Europe.
MFE already controls Mediaset, Italy’s largest TV broadcaster, and Spain’s number one commercial network Telecinco. With the addition of Pro7, MFE would become the third-largest commercial TV company in Europe, behind RTL (owned by German media giant Bertelsmann) and the U.K.’s ITV.
According to media reports, MFE has also put in a bid for TVN, the Polish free-to-air broadcaster which current owner Warner Bros. Discovery is trying to offload. Reuters has reported that MFE has arranged €3.4 billion euro ($3.6 billion) in financing to bankroll its expansion plans, with TV assets in Portugal and the Netherlands also thought to be in its sights.
MFE has been pursuing this cross-border strategy since 2019, believing any attempts to do single-country consolidation — merging the number one and number two commercial networks in an individual territory — would be blocked by national regulators. RTL tried just that, twice, proposing, in 2021, both a $4 billion merger between its French network M6 and market leader TF1, and a similar deal in the Netherlands that would link up its Dutch TV operations, RTL Nederland, with Talpa Networks, the TV group controlled by TV mogul and The Voice creator John de Mol. Both were blocked by anti-trust authorities.
So RTL, and ITV, have taken a different tack, funneling the cash they are still making in old-school free TV — “commercial TV is in decline, but it’s a slow, sweet decline, they are still very profitable,” says Godard — into growing their in-house streaming services (RTL+ and ITVX respectively), and their content business. ITV’s Moonage Pictures acquisition was just the latest in a buying spree that has seen the British group snatch up multiple boutique operations including Hartswood Films (producers of Sherlock), Eagle Eye Drama (Professor T.), and Nicola Shindler’s Quay Street Productions.
RTL, through its production division Fremantle, has been on a similar feeding frenzy, gobbling up prestigious production indies, among them Ireland’s Element Pictures (Poor Things, Normal People) Italian group Lux Vide (Devils), and U.K.-based Dancing Ledge Productions (The Responder). RTL has pushed back to “mid-term” its original target of getting Fremantle’s annual revenue to €3 billion ($3.24 billion) by the end of this year — it was €2.25 billion last year — but getting bigger, fast, is still the goal.
ITV is reportedly in early-stage talks with Abu Dhabi-backed investment group RedBird IMI to merge ITV Studios with RedBird’s All3Media, producers of global hit Traitors, a deal that would create a $4 billion production behemoth. There has also been speculation that Fremantle could itself make a bid for ITV Studios.
ITV CEO Carolyn McCall declined to comment on merger speculation during the company’s March 6 earnings call but noted that there’s one thing everyone in the industry agrees on: More consolidation is coming.