01 Jul, 1998

Once upon a time there was a problem in German TV land. Cinderella never seemed to get to the ball. The ugly sisters were squabbling. The loyal friend of Cinderella was trying his best to protect her. While the country's main landowner the baron was playing a supporting but pivotal role. These characters have been stuck in Act I for too long. What the story needs is a fairy godmother to turn Cinders into a princess and let her find her prince.

Let's critique the dramatis personae: The ugly sisters in this performance are Kirch Group and Bertlesmann. They seem to spend most of their time fighting each other rather than helping the German TV family to prosper.

Cinderella's loyal friend is Karel Van Miert, the EC competition commissioner, who is keen to allow all the sisters to grow and develop. But even though he can protect Cinderella from the full brunt of the ugly sisters' designs, he has limited powers. The baron is played by Deutsche Telekom, the owner of the largest distribution platform for TV in Germany, the cable networks.

Baron DT is a close confidant of the ugly sisters.

It's indeed ironic that the casting director seems to have chosen Rupert Murdoch for the role of fairy godmother. But sitting in the audience at Murdoch's keynote speech at the Medienforum conference in Cologne several weeks ago, it seemed to me that some important German players are keen to see Murdoch wave his magic wand and sort the fairy story out.

Chief among them is Wolfgang Clement, the minister for economics, technology and transport for North Rhine-Westphalia, considered by most to be the most powerful media state in Germany. Clement, who invited Murdoch to the Cologne summit, had helped facilitate Rupert Murdoch's bail-out of the bankrupt Vox television station several years ago. At that time Murdoch's News Corp bought a 49 per cent stake in the station. But since then, the managing partner in Vox, Bertelsmann, (according to Murdoch) had not taken the media mogul's advice to build up the station. Vox's audience share is stuck at about three per cent. Perhaps Bertelsmann was worried that a strong Vox would undermine the profitability of its chief TV station money-spinner RTL. Perhaps Bertelsmann looked at News Corp's portfolio of businesses from newspapers to books to TV and saw a company that could compete against it in several businesses and thought better of wanting to invite News Corp any further into Germany.

Whatever the reason, Murdoch is frustrated. In his speech he called his German TV interests "a minnow" compared to what is controlled by Kirch and Bertelsmann. He lamented that his prior efforts to join in the roll out of new digital TV services had also fallen to nothing. In fact Murdoch pulled out of a digital alliance with Kirch Group head honcho Leo Kirch because he thought the prices Leo was paying for pay-TV rights plus the technology the German company had chosen for the digital set-top box were too expensive. Given the supposed dire financial bind that Kirch seems to be in now, Murdoch's foresight on the Kirch digital project appears to have been 20/20.

The second iteration of German digital TV, the ill-starred digital alliance created last summer between Kirch, Bertelsmann and Deutsche Telekom in DF1, was blocked by Van Miert for being nothing short of a market stranglehold - not at all conducive to Cinderellas.

The demise in late May of the German-version of kid's channel Nickelodeon, seemed to confirm how tough it is for outsiders to do business in German TV. Without the economic clout of a Kirch or Bertelsmann or the "must-carry" status on the cable networks enjoyed by the state channels ARD and ZDF (which includes any spin-off niche channels they create), the additional burden of having to pay DT for transmitting Nickelodeon on the cable nets crippled the channel's business plan. And Nickelodeon is not alone.

As the casting director and executive producer of this TV fairy tale, Wolfgang Clement outlined in his Cologne speech a five-point blueprint for German TV and a segue into German TV's Act II.

First, Clement called for "urgent reform" of the public TV channels; second, further deregulation to allow new, foreign entrants to come into the German TV scene; third, a structure for digital TV that supports new entrants; fourth, restructuring of the cable networks to encourage new investment and new players; and lastly, the streamlining of regulatory authorities in Germany to make all this easier.

Murdoch as fairy godmother may sound a bit far-fetched, but given the desperate state of the German TV market, Murdoch may be the answer, at least a beginning. He certainly has the experience and the financial backing to play a major part. But Bertelsmann says it has no intention of granting Murdoch more control of Vox. Further, a Kirch executive told me that Murdoch was not needed to "bail out" the company financially.

Still a fairy godmother seems like a good idea given the complex mess that is the German TV market. Will Murdoch be the one with the magic wand?

Perhaps a good dose of Murdochian competition is just what Germany needs.