It is now clear that the rumoured Axel Springer ‘merger’ with German broadcaster Pro7-Sat.1 is “credible” in the words of investment bank Exane/BNP-Paribas.

A note to investors on July 8th by the bank says that while the tie-up is hypothetical at this stage, they nevertheless take a look at what any such deal might mean.  The bank stresses that the competition and anti-trust hurdles could still be significant.

But there are others. For example, 57 per cent of Axel Springer’s shares are controlled by Springer’s widow and she is said to be reluctant to cede control of the enlarged group. However, with the market capitalisation of Pro7-Sat.1 is around equal with that of Springer Group, a delicate balance will have to be found if Springer is to stay in control.

The bank says: “At first glance a tie-up between print and TV seems at odds with recent industry trends (News Corp spin-off). The move has set commentators scratching their heads and expressing scepticism (e.g., FT). Yet Springer is no longer a print business: 70 per cent + of EBITDA came from digital in 2014; we see c.80 per cent + by 2016.  Specific cost synergies would be mostly limited to central costs (3 per cent of Springer’s revenues?), but we think a deal could help Pro7 tackle its unsold ad inventory: German digital revenues of the new company could come in well over €1 billion, vs €0.3 billion for ProSieben today.”

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