The European Commission (EC) has cleared the take-over of Scripps Networks Interactive by Discovery Communications.
However, its approval is conditional on Discovery’s commitment to offer third party distributors the right, on a non-exclusive and unbundled basis, to distribute TVN24 and/or TVN24 BiS in Poland. The commitment will remain in place for seven years.
In a statement on its decision, the EC says that its investigation found that in the UK the proposed transaction would raise no competition issues given the limited overlap between the companies’ activities.
However, in Poland it risked increasing Discovery’s bargaining power vis-à-vis TV distributors because of the acquisition of certain channels that are particularly important in distributors’ basic pay-TV channel packages. In particular, TVN24, TVN’s flagship news channel, was identified as crucial to retail TV offerings. Following the transaction, Discovery would have had the ability and incentive to impose the licensing of its whole TV channel portfolio. This would have allowed it to increase its licensing fees to the detriment of Polish consumers and competition.
Significantly, the EC also says it rejected a request from Poland to refer the merger to the Polish competition authority (UOKiK) for assessment under Polish competition law.
It concluded that, given its extensive experience in assessing cases in the media sector, and the need to ensure consistency in the application of merger control rules in this sector across the EEA, it was better placed to deal with this case. Furthermore, it also considered that, to the extent that the transaction raises competition concerns, they are fully addressed by the commitments.
Commenting on the EC’s clearance for the take-over, David Zaslav, President and Chief Executive Officer, Discovery, said: “We are pleased with the positive decision of the European Commission.
“We believe that joining the Discovery and Scripps Networks’ family of brands and assets will allow us to better serve our passionate fans with more content on more platforms worldwide, while at the same time optimising our business for greater efficiency.”
As previously reported by Broadband TV News, Discovery agreed to buy Scripps last July in a cash-and-stock transaction worth $14.6 billion.
The deal, which is now expected to close later in Q1 this year, will significantly strengthen Discovery’s presence in Poland, where Scripps owns the national commercial broadcaster TVN.