Media-Political and Regulatory Environment
The German media landscape and the TV market in particular significantly differ from other European or English-speaking countries. In comparison, the TV market is tightly regulated and advertising opportunities are considerably more restricted than in the US, both in quantitative and qualitative terms.
At the same time, public broadcasters have large budgets. In Germany, they finance around 20 TV stations and approximately 60 radio stations with a budget of EUR 9.2 billion. In comparison, private providers operate over 280 TV stations and 270 radio stations (2014); their budget amounts to EUR 7.8 billion. The financing of public broadcasters is guaranteed by law via the license fee; their duty is to provide a “basic service to the population including information, education, culture and entertainment.” Advertising revenues are a second revenue source for public broadcasters.
In recent years, the dual system has become financially unbalanced, as the income of public broadcasters has risen steadily: In 2000, the license fee still amounted to DM 28.25 or EUR 14.44; by 2015, it was EUR 17.50 per household.
The fee has been standardized since January 2014 and is raised per household, regardless of the type and number of devices. Prior to this, the license fee amount was based on the number of devices. The switch to the new model reflects the convergence of media: TV and radio are increasingly being used on the Internet. The new license fee model has led to a further increase in public broadcasters’ income from license fees. Based on the declared financial requirements of broadcasters, additional income totaling EUR 1.5 billion is forecast for the period from 2013 to 2016.
However, private operators in Germany are competing not only with well-funded public broadcasters. The increasing market penetration of convergent devices is fundamentally changing the competitive situation for media companies: The wide range of services and transmission routes is growing in the wake of digitalization and competition with global providers is becoming more intense. ProSiebenSat.1 has positively embraced this development and identified numerous growth opportunities in this dynamic market development. This requires an equivalent competitive environment for all market participants. However, global providers such as Google or Facebook are currently not subject to the same statutory provisions and regulations in Germany. Copyright law or legal requirements for the protection of young people serve as examples here.
In addition, quantitative and qualitative restrictions make fair competition difficult, because TV in Germany is more tightly regulated than other media. This affects both the scope of advertising and its content: For example, time for German TV advertising is restricted to a maximum of twelve minutes per hour, while opportunities to place advertising in certain programs are limited.
In addition, private broadcasting is regulated by German media concentration legislation and programming restrictions. To ensure plurality of opinion, SAT.1, for example, has to finance regional programs for a total of five broadcast areas and has to broadcast these in parallel during prime time. The Interstate Broadcasting Treaty also places an obligation on some private operators to finance and broadcast programs from independent third-party companies. Legal proceedings are currently pending regarding SAT.1’s controversial current obligation to broadcast these third-party programs.
A dialog about regional commercial breaks is also taking place: Last year, Federal States imposed new statutory restrictions. Different regional advertisements during television programs that can be received throughout Germany have been forbidden since January 2016. Exceptions can be regulated under state law in the individual Federal States. ProSiebenSat.1 Group has initiated legal proceedings against this regulation and offers its regional customers separate marketing models for national TV spots: At the same time, the company is continuing to develop technical possibilities. For instance, it will expand its offers for different regional forms of advertising via HbbTV.