Commercial TV Struggles With Tight German Laws

BY most accounts, the Vox television channel was poorly managed and had a lackluster, talk-show format. The combination meant consistently low ratings.

So it was no surprise when the station - one of 13 private channels in Germany - announced March 29 that it was shutting down in early May.

``Vox had an unpolished concept that did not meet viewer expectations,'' says Vox spokesman Uwe Krink, reflecting on the channel's demise. ``Vox also tried to get started in the middle of a recession.''

While few viewers may mourn the loss of Vox after only 15 months of broadcasting, the station's collapse is intensifying the debate on Germany's media ownership laws.

Without legislative changes, Mr. Krink and other media representatives say, other commercial stations are likely to close. And in the long-term, the restrictive legislation could hurt the competitiveness of German publishing conglomerates, such as Bertelsmann AG.

Commercial television in Germany has existed only since 1985. Before then, two state-run channels were about the only option for viewers. Although commercial stations are making inroads on TV ratings, in many cases their financial status remains precarious as Germany struggles to dig out of recession. Only one private channel, RTL, has recovered its original investment and is now making money.

Bertelsmann, the world's second-largest media group after Time Warner, has been the German company most critical of existing TV-ownership laws. The biggest legislative flaw, Bertelsmann officials say, is a regulation that prohibits one company from holding a majority stake in a TV station. As a result, commercial stations are owned by cumbersome corporate coalitions whose members don't always see eye-to-eye when it comes to programming and other management. Cologne-based Vox, for example, was owned by Bertelsmann, Suddeutscher Verlag, the WestLB bank, and others. Because it owns 39 percent of RTL, German law restricted Bertelsmann's stake in Vox to 24.9 percent. A stake above 25 percent gives a shareholder a management veto.

Bertelsmann spokesman Helmut Runde says that if the law had permitted it, Bertelsmann would have increased its stake in Vox, perhaps saving the channel from bankruptcy and its 390 employees from unemployment.

The losses at Vox are just a blip on Bertelsmann's balance sheet. It projects that sales this fiscal year will exceed 1992-93's record performance of $1.1 billion. The conglomerate's best performer is its music group, which includes the Arista Record label. It also runs a book club and has extensive newspaper and television holdings.

In all, Vox lost about $377 million, costing Bertelsmann about $94 million. But in the conglomerate's eyes, a loss-making television channel - even over the medium term - is better than no channel at all. If Bertelsmann is to continue to be successful in the 21st century, Mr. Runde says, it must make the transition from print to audio-visual, which is now seen as the most lucrative media field. Existing laws, however, are acting to brake Bertelsmann's moves, he adds. ``We've become pioneers [in commercial TV] not because we're adventurers, but because we've had to,'' he says. ``And when you make such a move, you should make it with all your strength.''

Some lawmakers agree. One, Peter Glotz - a Social Democratic member of Germany's parliament - insists nothing could have saved Vox, but says a new legislative formula must be found to allow media conglomerates to own TV stations outright.

``The aim [of the current legislation] was to preserve the plurality of opinion and the independence of stations,'' Runde says. ``But as a consequence, this limits the possibilities. Decisionmaking is difficult. No one can really influence programming,'' he continued. ``It's very difficult with this media legislation for a commercial station to be successful.''

Part of the problem with the regulatory situation is inexperience, as commercial television operations are still relatively new in Germany. But a far more important factor is the method of regulation, Mr. Glotz says.

Currently, television is supervised not by the federal German government, but by the 16 state governments. This system means that reform requires lots of horse-trading and lengthy delays.

``This is too complicated,'' Glotz says. ``The German system of federalism will be shown not to work. We will eventually have to establish something like the [United States] Federal Communications Commission.''

Glotz is convinced German regulatory changes will come. But they will take time. And as Germany contemplates change, recent Italian experience sounds an alarm. Much of Italian media mogul Silvio Berlusconi's success in the March elections is attributed to his media empire.

Given the nation's Nazi past, many Germans are still afraid of a similar electoral development in Germany, Krink and others say.