Cartel body nixes Liberty Teuton deal
Monopoly fears ends bid for Deustche Telekom
The sticking point remains Liberty's domination of the market as content provider and cable operator in a deal that would give it access to 10 million German households. Liberty has until Feb. 15 to respond before the regulators' final decision Feb. 28.
"Liberty wants to tie consumers to its own decoders and has refused to provide an open interface for third-party access," cartel office president Ulf Boege says. Under such restrictions, Liberty also would dominate the purchasing power for content, he adds.
Boege additionally is concerned about Liberty's plans to buy level-four cable providers, which control the last connections to consumers. The company maintains it needs those connections to upgrade the whole cable systems.
"Liberty considers the separation an anomaly," Boege says.
Regulators also are ill at ease with Liberty's indirect holdings in local cablers EWT/TSS and Primacom.
Still, Boege says Liberty would get approval if its domination of the TV market were balanced by increased competition in the telco sector via cable. Liberty topper John Malone, however, has said his company would not risk a large investment in cable telephony to win regulatory approval.
Nevertheless, Liberty has compromised with regulators. In January it dropped its bid for Rupert Murdoch's 22% stake in the Kirch Group's pay TV division -- a move widely seen as a sop to the watchdogs. Liberty wanted Kirch's Premiere World, claiming the digital pay TV platform was vital for a successful cable venture.
Liberty could still win approval. A similar warning by the cartel office last year led oil giants BP and Shell to modify their bids before the successful mergers of their local assets with two German gas station chains.
While the Liberty deal remains crucial to Deutsche Telekom's aim of relieving its $56 billion debt, the telco has said it is prepared to find a new buyer. Several groups are interested in bidding for all or parts of the cable package if Liberty is rejected.
