Will internal rifts distract ProSieben from seizing new market opportunities?

Last week, ProSieben, one of Germany’s top media groups, received a formal request by its top stakeholder, Italy’s MediaForEurope (MFE), for individual votes over executive and supervisory board member appointment. The request represents the latest development in an internal rift that has been simmering since December, when ProSieben failed to give MFE advanced notice of its proposed nominees for the supervisory board. These tensions are likely to come to a head in the upcoming General Meeting on May 5, as ProSieben seeks to push their nominations through.

Aside from calling into question its approach to corporate governance, ProSieben’s apparent refusal to compromise on board appointments is increasingly becoming an unwelcome distraction. At a time when the media landscape is quickly shifting, with viewers increasingly demanding independent and hard-hitting news reporting, it is still unclear whether ProSieben will manage to settle its internal affairs and concentrate on seizing the new opportunities offered by both the German and European markets.

A matter of talent

The controversy currently engulfing ProSieben’s board, however, is not without merit. Finding and, most of all, retaining top talent is becoming a growing concern for many traditional TV broadcasters, who are having to fend off big streaming giants from poaching their most able executives. Seemingly recognizing the increasingly competitive landscape for top executive talent, ProSieben’s CEO Rainer Beaujean’s recently stated the need to “have candidates who are best suited to ProSiebenSat.1's strategy over the next three to five years.”

However, ProSieben’s actions are currently failing to match these lofty intentions, as it continues to insist upon nominees with checkered pasts such as Bert Habets, former CEO of RTL Group. His record at his former company, however, is far from stellar, as was made clear by RTL’s decision to deviate from protocol and explicitly refuse to enact the usual discharge protocol for Habets.

While the reason behind his departure remains unclear to this day, some have pointed to Habets’ failure to adequately investigate a case of suspected embezzlement by a manager at Stylehaul, a fashion and beauty online platform in which RTL Group had a stake, as a major contributing factor. The resulting legal case resulted in a manager being sentenced to more than six years in US federal prison last year.

Habets had also been criticized for not showing enough presence at RTL, at a time when the CEO of parent company Bertelsmann, Thomas Rabe, was working to transform Bertelsmann to stay competitive with tech giants like Amazon and Netflix. Rabe ultimately replaced Habets at the helm of RTL in April 2019.

Should it come to pass, Habet’s appointment would therefore weaken the overall strength of ProSieben’s board. Worse still, the decision to press ahead with the nomination come what may has placed the company in direct conflict with MFE, undermining the latter’s vision of building an attractive pan European private media platform.

A changing landscape

The entire controversy surrounding ProSieben’s corporate governance comes also at a bad time, as German and European media are undergoing rapid transformations. One of the most recent developments has come in the form of greater public demand for news reporting and hard-hitting journalism.

This trend can at least partly be traced back to improved trust in the media as a result of its coverage of the Covid-19 crisis. According to a survey conducted on behalf of public broadcaster Westdeutscher Rundfunk, more Germans were persuaded of the credibility of media reports compared to before the pandemic.

Rather than falling off at the end of the pandemic, recent events in Ukraine have bolstered public appetite for independent and credible reporting. Nowhere has this trend been more evident than in the meteoric rise of The Kyiv Independent, whose reportages from the ground in Ukraine have seen its following on Twitter increase from 30,000 to over 2 million in a matter of weeks.

In the middle of what has been a bloody conflict, individual acts of journalistic courage have also received extensive attention. One of Germany’s top newspapers, Die Welt, for example, hired Russian journalist Marina Ovsyannikova after the clip of her interrupting a live news broadcast on Russian state television to protest Moscow’s invasion of Ukraine made its way around the world. Four weeks later, she published her first opinion piece in Die Welt's online edition, titled “The Russians Are Afraid.”

As viewers increasingly reward high quality reportages and independent news, private networks have been quick to adapt their offering to match demand. For instance, ProSieben has already announced vast changes to its program, including broadcasting more special programs and extending breakfast television by one hour.

An opportunity for private broadcasters

More generally, the news segment in Germany is an increasingly interesting prospect for private TV networks seeking to broaden their remit. It is especially so in the wake of very public debates about alleged pro-centre-left and governmental bias of Germany’s public-service broadcasters, ARD and ZDF among them, which are heavily subsidized by tax-payer money.

German conservatives have long accused the publicly-funded TV networks ARD and ZDF of liberal bias, and a 2019 comparative study by The Reuters Institute and Oxford University found that the outlets indeed broadcast to an almost exclusively left-leaning audience. Private networks like RTL and n-tv, on the other hand, typically broadcast to a right-leaning audience.

In the same way, a 2016 study conducted by the University of Würzburg found that both ARD and ZDF failed to meet “central quality standards” in their reporting on the Greek debt crisis, including an inconsistent separation of news and opinion, and a bias against the Greek government. Researchers also found public network reports to be lacking in depth, and instead indulging in alarm and “negativism.”

There is, then, a wide opening for ProSieben to step up and meet a growing demand for hard-hitting, balanced journalism on current affairs. The question remains: will ProSieben bury internal hatchets to pursue new market opportunities?

This article does not necessarily reflect the opinions of the editors or management of EconoTimes