The European Commission's decision yesterday to block the planned German pay-TV alliance between Bertelsmann, Kirch and Deutsche Telekom is probably the best solution for Bertelsmann, EU and industry sources said.
While cash-strapped Kirch was willing to make sacrifices in order to win approval for the alliance, Bertelsmann evidently believed that the price required to allay the Commission's monopoly fears was simply too high.
Bertlesmann already has joint control with Kirch of pay-TV company Premiere and a deal giving it access to Kirch's coveted decoder technology and film rights.
The price for Commission approval for the alliance with cable operator Telekom would have included, at least, allowing rival cable TV firms to market Premiere, selling 25 per cent of Kirch's extensive rights to Hollywood films and divesting 25 percent of Beta-Research, the Kirch-owned company that controls the decoders.
CLT-Ufa, a joint venture combining the television interests of Bertelsmann and Audiofina, said consistently in the last week that any further concessions would endanger Premiere's profitability.
European competition chief Mr Karel Van Miert stressed at a news conference the intense involvement of CLT-Ufa in the last phase of the talks and later told reporters that the Luxembourg-based company did not want the deal with the strings that the EU executive wanted to attach.
CLT-Ufa's CEO Mr Rolf Schmidt-Holtz said last week that if the Commission sank the alliance, Bertelsmann had agreed with Kirch to use its decoder boxes and to broadcast football matches using the same technology. That, he added, "had nothing to do with Brussels".
