CELEX: 32014M7282
Language: en
Date: 2014-09-16 00:00:00
Title: Commission Decision of 16/09/2014 declaring a concentration to be compatible with the common market (Case No COMP/M.7282 - LIBERTY GLOBAL / DISCOVERY / ALL3MEDIA) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

Brussels, 16.09.2014
C(2014) 6574 final

                                        [pic]

|To the notifying parties                                               |                                                                       |

Dear Sir/Madam,

Subject:    Case M.7282 - LIBERTY GLOBAL / DISCOVERY / ALL3MEDIA
Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004[1]

 1) On 11 August 2014, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council  Regulation  (EC)  No
    139/2004 by which the undertakings Liberty Global plc ("Liberty", United Kingdom) and Discovery Communications,  Inc.  ("Discovery",  United
    States) acquire within the meaning of Article 3(1)(b) of the Merger Regulation joint control of  the  whole  of  the  undertaking  All3Media
    Holdings Limited ("All3Media", United Kingdom) by way of purchase of shares.

 2) Liberty and Discovery are collectively referred to as the "Notifying Parties" and, together with All3Media, as the "Parties".

       THE PARTIES

 3) Liberty is a UK based company which owns and operates cable networks in several EU Member States as well as in certain countries outside  of
    Europe.[2] In the TV related markets, Liberty is active primarily in the supply  of  retail  TV  services  through  its  cable  networks,[3]
    although it also has limited TV channel activities in the Netherlands and Belgium.[4] Liberty is not currently active in the  production  of
    TV content or licensing of TV content rights.[5]

 4) Liberty is a public limited company listed on NASDAQ. According to the Notifying Parties, a significant  minority  shareholder  of  Liberty,
    John Malone (a US citizen who also holds certain  minority  shareholdings  in  other  companies  active  in  the  media,  communication  and
    entertainment industry),[6] would not be capable of exercising decisive influence over Liberty. The issue of whether  John  Malone  controls
    Liberty can however be left open for the purposes of this investigation, because the proposed transaction will  not  give  rise  to  serious
    doubts as to its compatibility with the internal market even under the assumption that Mr Malone were to control Liberty.

 5) Discovery is a US media company that is primarily active in the production of TV  channels.  Within  the  EEA,  across  the  Nordic  region,
    Discovery owns and operates SBS Discovery Media AS ("SBS Nordic"), a portfolio of television channels that feature non-fiction  content,  as
    well as locally produced entertainment programmes, sports, series and movies.  Since 30 May 2014, Discovery also owns a controlling interest
    in Eurosport International ("Eurosport") which operates the Eurosport channels. Discovery also has more limited activities in the production
    of TV content through its two independent TV production companies in the UK, Raw and Betty, and in the licensing of TV content rights. Based
    on information available to the Commission, it appears that no  single  shareholder  (including  Mr.  John  Malone,  who  is  a  significant
    shareholder of Discovery) has the ability to exercise sole or joint control over Discovery.[7]

 6) All3Media is a UK independent TV, film and digital production company comprising a number of production and distribution companies in the EU
    (UK, Germany, the Netherlands), in New Zealand and the US. In the EEA, All3Media is active in the  production  of  TV  content  and  in  the
    licensing/distribution of TV content rights, in particular in the UK, Germany, the Netherlands and Belgium.[8]

       THE OPERATION

 7) The proposed transaction concerns the acquisition of joint control of All3Media by Liberty and Discovery.

 8) Pursuant to an agreement entered into between the Notifying Parties on 8 May 2014, Liberty and Discovery will acquire each 50% of the  share
    capital of the newly created joint venture company DLG Acquisitions Limited ("JVCo"), which in turn will acquire 100% of  the  issued  share
    capital of All3Media.

 9) According to the JV term sheet entered into by Liberty and Discovery on 8 May 2014, the Board composition and governance regime of JVCo will
    be reflective of a 50/50 joint venture [commercial terms of joint venture agreement]

10) Therefore, the proposed transaction constitutes a concentration within the meaning of Article 3(1)(b) of the Merger Regulation.

       EU DIMENSION

11) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5  000  million  (Liberty:  EUR  10  898  million;
    Discovery: EUR 4 574 million; All3Media: EUR […] million)[9]. Each of them has an EU-wide turnover in excess of EUR  250  million  (Liberty:
    EUR […] million; Discovery: EUR […] million; All3Media: EUR […] million), but they do not achieve more than two-thirds of their aggregate EU-
    wide turnover within one and the same Member State. The notified operation therefore has an EU dimension.

       MARKET DEFINITION

1 Introduction: the TV value chain and the Parties' activities

12) Audio-visual TV content (hereinafter, also "TV content") comprises entertainment  products  (films,  sports,  series,  shows,  live  events,
    documentaries, etc.) that can be broadcasted via TV.[10] In its past decisional practice, the Commission has distinguished  four  levels  in
    the value chain for TV-related content, namely: (1) the production of TV content; (2) the licensing of broadcasting rights  relating  to  TV
    content; (3) the wholesale supply of TV channels; and (4) the retail supply of TV services to end customers.[11]

13) The proposed transaction mostly relates to levels (1) and (2) identified above, since All3Media is only  active  in  the  production  of  TV
    content and in the licensing of broadcasting rights relating to TV content rights.

1 Production of TV content

14) TV production companies produce TV content either (i) for internal use on their own TV channels or  video-on-demand  services  if  they  are
    vertically integrated broadcasters (i.e., captive TV production),  or  (ii) for  supply  to  third-party  customers  (i.e.,  non-captive  TV
    production). Third-party customers are typically broadcasters (or,  alternatively,  non-traditional  platforms,  i.e.  Over-The-Top  ("OTT")
    platforms that order TV content from TV production companies.

15) In most cases, TV production companies produce TV content tailored to the needs of a broadcaster on the basis of original  TV  formats  that
    they develop themselves or that they acquire from right holders (so-called  "commissioned  production").  However,  in  some  instances,  TV
    production companies are hired by a broadcaster to simply provide the technical production means and deliver the finished programme based on
    a TV format owned or acquired by the broadcaster (so-called "production-for-hire" or "supply of TV production services").

16) The production costs are most often borne entirely or almost entirely by the  broadcaster.  As  regards  ownership  of  the  various  rights
    relating to the TV content (e.g., primary TV broadcast rights, catch up, VOD, etc), the extent to which those rights  are  retained  by  the
    production company – as opposed to the broadcaster – may vary based on a number of factors, such  as  national  regulation  in  the  country
    concerned, the type of broadcaster, the outcome of the commercial negotiations between the parties, etc. Producers and/or  broadcasters  may
    then achieve secondary revenues by further licensing/distributing the TV content or the TV format to third parties.

17) In light of the above, the supply-side of this market comprises TV production companies, while the demand-side comprises third parties  that
    commission the production of TV content or hire TV production services, typically broadcasters or OTT players.

18) As regards the supply-side of the market:

      a. All3Media produces TV content for customers based in the United Kingdom, Germany, the Netherlands and, to a more limited extent, Austria
         and France;

      b. Liberty does not produce TV content in the EEA; and

      c. Discovery's production activities within the EEA are limited to the United Kingdom.

19) As regards the demand-side of the market:

      a. All3Media does not commission TV content;

      b. Liberty purchases a limited amount of TV production services within the EEA (in 2013  Liberty  only  purchased  these  services  in  the
         Netherlands and Belgium); and

      c. Discovery commissions TV content throughout the EEA, mostly in the Scandinavian countries (through its SBS Nordics subsidiary).

2 Licensing of broadcasting rights relating to TV content

20) This level of the value chain concerns the licensing of broadcasting rights relating to pre-existing TV content, i.e. TV  content  that  has
    been previously produced and is subsequently made available "off-the-shelf" by the rights holder (so-called "pre-produced" TV content).

21) The broadcasting rights relating to TV content can belong to either (or a combination of) the rights holder to the TV format, the production
    company that produced the TV content or the company that commissioned the production of the TV content. In addition, the broadcasting rights
    can belong to a third-party distributor, to which they were licensed by the original owner, along with a right to sub-license.

22) All of these categories of rights owners, which constitute the supply-side of the market, license these rights to content aggregators, which
    constitute the demand-side of the market, namely: (i) TV broadcasters, which then incorporate them into linear TV channels; or  (ii) content
    platform operators, which then retail the TV content to end users on a non-linear  basis  (i.e.,  Pay-Per-View  ("PPV")  or  Video-On-Demand
    ("VOD"), including OTT platforms).

23) As regards the supply-side of the market:

      a. All3Media is active in the licensing of broadcasting rights relating to TV content across the EEA, mostly in the UK;

      b. Liberty is not currently active in the licensing of TV content;[12] and

      c. Discovery has limited activities in relation to the licensing of individual TV content in several EEA Member States.

24) As regards the demand-side of the market:

      a. All3Media does not acquire broadcasting rights for pre-produced TV content for the purpose of incorporation into TV channels  or  retail
         to end users;[13]

      b. Liberty acquires broadcasting rights for pre-produced TV content both for incorporation into its Pay-TV  channels  in  Belgium  and  the
         Netherlands and for distribution of retail VOD services via its cable network; and

      c. Discovery acquires limited broadcasting rights for pre-produced TV content in most EEA Member States.

3 Wholesale supply of TV channels

25) TV channel suppliers use the TV content that they have acquired or produced in-house in order to package it  into  linear  TV  channels.  TV
    channel suppliers (which constitute the supply-side of the market) then license their channels to providers of  retail  TV  services  (which
    constitute the demand-side of the market) for supply to end users. Some TV channels suppliers are vertically integrated  as  they  are  also
    active as a retail TV operator. Other TV channel suppliers are not vertically integrated and rely on retail TV operators to distribute their
    channels.

26) As regards the supply-side of the market:

      a. All3Media is not active;

      b. Liberty wholesale supplies Pay-TV channels in the Netherlands and in Belgium;[14] and

      c. Discovery wholesale supplies a range of TV channels to TV retailers across the EEA.

27) As regards the demand-side of the market:

      a. All3Media is not active;

      b. Liberty acquires the rights to broadcast TV channels in several EEA Member States where  it  is  active  as  a  retail  supplier  of  TV
         services; and

      c. Discovery is not active.

4 Retail supply of TV content to end users

28) Providers of retail TV services supply to end users (i) packages of linear  TV  channels  (which  they  have  either  acquired  or  produced
    themselves) and (ii) non-linear PPV or VOD services. TV content can be delivered to end users through a number of technical means.[15]

29) In the retail supply of TV content to end users:

      a. All3Media is not active;

      b. Liberty provides retail TV services in several Member States across the EEA; and

      c. Discovery is not active.

5 Conclusions

30) In light of the above, and, in particular, of the fact that the activities of All3Media are limited to the production of TV content  and  to
    the licensing of broadcasting rights related to TV content, the competitive assessment of the  proposed  transaction  will  focus  on  these
    levels of the value chain. However, the downstream level related to the wholesale supply of TV channels will also be discussed  as  part  of
    the analysis of the possible spill-over effects of the proposed transaction under Article 2(4) of the Merger Regulation. Indeed, this is the
    only level of the value chain where both Liberty and Discovery are active and which has a relationship (vertical  in  this  case)  with  the
    activities of All3Media.

2 Relevant market definition

1 Production of TV content and licensing of broadcasting rights for TV content

       Product market definition

1 Production of TV content vs. licensing of broadcasting rights for TV content

31) From a demand perspective, the production of TV content and the licensing of broadcasting rights for TV content constitute alternative  ways
    through which downstream players (e.g., TV channel broadcasters, TV service retailers, OTT providers) may source TV content. Therefore,  the
    question arises whether and to what extent these TV content sourcing models could be considered substitutable from the demand side.

32) In its past decisional practice regarding the production of TV content, the Commission has found the product market  for  production  to  be
    limited to non-captive TV production, thereby excluding captive TV production (TV content produced by broadcasters  for  use  on  their  own
    channels), as this TV content is not offered on the market.[16] Consistent with its decisional practice, the Commission considers this to be
    the correct approach to be applied also in the case at hand. However, the Commission has not yet had the opportunity in the past to  examine
    the question whether the production of TV content and the licensing of broadcasting rights for  TV  content  belong  to  the  same  relevant
    product market.

33) The Notifying Parties submit that the relevant product markets are (i) the production and commissioning  of  TV  content  (limited  to  non-
    captive production or also including captive) and (ii) the supply and acquisition of individual TV content  rights  for  incorporation  into
    linear TV channels or to populate non-linear services. According to the Notifying Parties, these two markets should be  kept  separate  from
    each other.

34) Broadcasters who seek TV content to populate their channels generally have a choice between a  number  of  sourcing  models,  which  can  be
    broadly categorised as follows:

      a. acquiring broadcasting rights for pre-produced TV content;

b. obtaining TV content produced on an "ad hoc" basis (i.e., tailor-made), by either (i) commissioning  TV  content  from  a  production  company
   (which owns the relevant TV format), (ii) hiring a production company to provide the technical means and deliver the finished TV content based
   on a format owned by the broadcaster, or (iii) producing the content themselves by relying on their in-house facilities.

35) The market investigation conducted for the purpose of reviewing the present transaction indicated that, according to the  vast  majority  of
    broadcasters, the cost of acquiring broadcasting rights for pre-produced TV content is generally considerably lower compared to the cost  of
    sourcing tailor-made TV content, although costs can vary on a case-by-case basis depending on a number of factors (e.g., type of TV content,
    ownership of relevant Intellectual Property Rights ("IPRs"), length of TV programme, expected success, place  of  production,  existence  of
    exclusivity clauses, etc.). Acquiring pre-produced TV content tends to be cheaper because  the  rights  owner  is  able  to  grant  multiple
    licenses with a more limited scope for the same TV content (e.g., in different territories, to different licensees in distinct time  periods
    and/or for linear vs. non-linear broadcast).[17]

36) However, for most broadcasters, tailor-made TV content is not substitutable with pre-produced TV content. This is because certain  types  of
    TV content (e.g., live entertainment and locally originated TV content as opposed to international/US films and TV series) are typically not
    available in pre-produced format, but must either be commissioned or produced in-house by the broadcaster.[18]

37) Although cost-related factors play a role in the broadcasters' choice of TV content and sourcing model  (to  a  varying  degree,  depending,
    e.g., on the budget of the channel, on the specific time slot, etc.), such choice is also largely driven by the need to offer a given  range
    of TV content depending on the focus of the channel and on the preferences of the target audience. For most channels, tailor-made TV content
    is therefore an important part of their TV offering (except those that, e.g., are not targeted at a local audience  or  do  not  offer  live
    entertainment) and is also often perceived by broadcasters  as  a  tool  to  help  developing  a  channel's  brand  identity.  Indeed,  many
    broadcasters have separate budgets for tailor-made TV content and pre-produced content.[19]

38) All these factors suggest that pre-produced TV content and tailor-made TV content are complementary products rather  than  substitutes  from
    most broadcasters' perspective.

39) Similarly, according to most producers who replied to the market investigation, licensing pre-produced content and producing tailor-made  TV
    content are two distinct complementary supply models. Production companies rarely pre-produce TV content that is not  commissioned  upfront,
    as to do so would entail significant financial risks. Typically, production companies produce TV content on a commissioning basis (or  on  a
    producer-for-hire basis), which, depending on the circumstances (e.g., content type), they may be able to further license  at  a  subsequent
    stage to maximise their revenues.[20]

40) With specific respect to the production of TV content, the market investigation provided  conflicting  indications  as  regards  a  possible
    segmentation between commissioned production and supply of production services. Some broadcasters  suggested  that,  as  an  alternative  to
    commissioning TV production from a company who also owns the relevant TV format, they could consider acquiring the relevant  TV  format  and
    hiring a third-party company to produce based on that format. However, others pointed out  that  such  option  is  often  not  available  in
    practice, since TV production companies do not always make the TV format available on a stand-alone basis, but tend to sell it as  a  bundle
    together with their productions services.[21]

41) In light of the above, the Commission concludes that, based on the results of the market investigation in the case at hand,  the  production
    of TV content and the licensing of broadcasting rights for TV content appear to belong to separate relevant product  markets.  However,  the
    question whether the market for the production of TV content is to be further  segmented  between  commissioned  production  and  supply  of
    production services can be left open as the proposed transaction would not give rise to serious doubts as  to  its  compatibility  with  the
    internal market under either scenario.

2 Type of TV content

42)  In its past decisional practice regarding the licensing of broadcasting rights for TV  content,  the  Commission  has  identified  separate
    markets for (i) films, (ii) sports and (iii) other TV content.[22] Moreover, within each of the films and sports  segments,  the  Commission
    also discussed possible additional sub-segments. However, with specific respect to the market for the licensing of  TV  content  other  than
    films and sports (hereinafter also referred to as "general entertainment TV content"), which is the only area  where  some  of  the  Parties
    (Discovery and All3Media) are effectively active, the Commission has  not  yet  identified  specific  sub-segments  which  would  constitute
    separate product markets. The Commission considers that a segmentation between films, sports and other TV content could be  applied  to  the
    market for the production of TV content as well.

43) According to the Notifying Parties, a single market exists for all TV content, irrespective  of  content  type.  Moreover,  with  particular
    regard to the markets for the production and for the licensing of TV content other than films and sports, the Notifying Parties submit  that
    there is no basis to further segment these markets based on the type of content, such as for example, between  scripted  and  unscripted  TV
    content, genres of TV content (e.g., reality shows, drama, comedy, children, documentaries, etc.) and/or between premium and non-premium  TV
    content.

44) In the case at hand, the Commission has confirmed, on the basis of the market investigation, the broad distinction between the licensing  of
    TV broadcasting rights (and, similarly, the production of TV content) for each of films, sports and other TV content.  However,  the  market
    investigation was not conclusive as regards potential further distinctions based on content type.

45) In any event, the question whether the markets for the production of general entertainment TV content and for the licensing of  broadcasting
    rights for general entertainment TV content are to be segmented based on content type/genre can be left open  as  the  proposed  transaction
    would not give rise to serious doubts as to its compatibility with the internal market under either scenario.

3 Exhibition window

46) In its past decisional practice regarding the licensing of broadcasting rights for TV content (including for "other" non-film, non-sport  TV
    content, which is the relevant type of content for the purposes of the assessment of the proposed transaction), the Commission  has  divided
    the market for the licensing of broadcasting rights by exhibition window (i.e., subscription VOD ("SVOD"), transactional VOD ("TVOD"),  PPV,
    first Pay TV window, second Pay TV window, and FTA).[23]

47) Based on the results of the market investigation in the case at hand, the Commission considers that this distinction appears to continue  to
    be applicable to, and to correspond to market practice in the licensing of broadcasting rights for the different types of pre-produced  non-
    film, non-sport TV content. The Commission, however, considers such market segmentation to be less relevant in relation to  the  market  for
    the production of such TV content. Indeed, from the demand side, there does not appear to be any intrinsic difference between  the  type  of
    non-film, non-sport content that a TV broadcaster, a TV retailer and/or an OTT platform would source or  commission  from  a  TV  production
    company, depending on the exhibition window in which it intends to broadcast such content on Pay TV  or  on  FTA  TV.  Moreover,  after  the
    relevant TV content is produced, the licensor is typically free to decide to whom to license such content and for what exhibition window and
    may actually license the same content for different exhibition windows in different territories (or even in the same territory).

48) In light of the above, the Commission considers that, based on available information, it does not appear appropriate to segment  the  market
    for the production of "other" TV content on the basis of the exhibition window where such content is subsequently broadcast.  In  any  case,
    the question whether the markets for the production of general entertainment TV content and for the  licensing  of  broadcasting  right  for
    general entertainment TV content should be segmented based on the relevant exhibition window can be left open as  the  proposed  transaction
    would not give rise to serious doubts as to its compatibility with the internal market under either scenario.

       Geographic market definition

49) In its past decisional practice, the Commission defined the market for production of TV content as  national  in  scope  or  broader,  i.e.,
    comprising a particular language region.[24] Similarly, as regards the licensing of broadcasting  rights  for  TV  content,  the  Commission
    considered the market to be national in scope or encompassing a broader linguistically homogeneous area.[25]

50) The Notifying Parties do not take a firm view on the geographic delineation of the markets for production/commissioning of  TV  content  and
    licensing/acquisition of broadcasting rights relating to TV content.

51) The market investigation conducted in the present case revealed that the geographic scope of the contracts for the production of TV  content
    and for the licensing of broadcasting rights for TV content is typically limited to a  national  territory  or  comprises  a  linguistically
    homogeneous area, either within one Member State or covering (parts of) the territory of multiple Member States.[26]

52) In light of the above, the Commission concludes that there are no indications of any need to depart from the geographic markets  defined  in
    previous decisions.

4 Wholesale supply of TV channels

       Product market definition

53) In its past decisional practice regarding the wholesale supply of TV channels, the Commission identified two separate  product  markets  for
    FTA channels and for Pay-TV channels and examined a further potential sub-segmentation between "basic" and "premium" Pay-TV channels.[27] In
    addition, the Commission also examined, but ultimately left open, a possible distinction based on thematic  content  (films,  sports,  news,
    youth channels, etc.).[28]

54) The Notifying Parties do not take a firm position as to the potential delineations of the market for the wholesale supply of TV channels.

55) In the present case, the market investigation did not provide any indication as to the need to depart from the market definition in previous
    decisions.

       Geographic market definition

56) In its past decisional practice, the Commission found the market for the wholesale supply of TV channels to be either national in  scope[29]
    or potentially to comprise a broader linguistically homogeneous area encompassing more Member States.[30]

57) The Notifying Parties do not take a firm position as to the potential delineations of the market for the wholesale supply of TV channels.

58) In the present case, the market investigation did not provide any indication as to the need to depart from the market definition in previous
    decisions.

       COMPETITIVE ASSESSMENT

1 Horizontal analysis

59) The proposed transaction gives rise to limited horizontal overlaps between Discovery and All3Media in relation to the production of  general
    entertainment TV content (i.e., TV content other than sports and films) in the United Kingdom and the licensing of  broadcasting  rights  to
    general entertainment TV content in a number of EEA Member States (namely Austria, Belgium, Croatia, the Czech Republic,  Denmark,  Estonia,
    Finland, France, Germany, Greece, Hungary, Italy, Latvia, Lithuania, Netherlands, Poland, Portugal, Romania, Slovakia, Spain and Sweden).

60) The proposed transaction does not, however, give rise to any horizontally affected markets as the Parties' combined share in  these  markets
    remains well below 20%.

61) As regards a possible segmentation of these markets by type of TV content, such as for example, between scripted and unscripted TV  content,
    between genres of general entertainment TV content (e.g., reality shows, drama, comedy, children, documentaries, etc.), by exhibition window
    and/or a possible segmentation of the market for the production of general entertainment TV  content  between  commissioned  production  and
    supply of production services, the Notifying Parties submit that their combined market shares in each  of  these  segments  equally  do  not
    exceed 20%.

62) Moreover, the market investigation did not provide any indications as to any potential anti-competitive effects of the proposed  transaction
    on these markets and/or any of their possible segments. While the majority of the respondents to the market investigation  acknowledged  the
    importance and the attractiveness of All3Media's TV content offer,[31] most customers and competitors  agreed  that  post-transaction  there
    will remain sufficient competitors capable of providing similar content.[32]

63) In light of the above, the Commission therefore concludes that the proposed transaction will not give rise  to  serious  doubts  as  to  its
    compatibility with the internal market as a result of horizontal anti-competitive effects.

2 Vertical analysis

64) The proposed transaction gives rise to limited vertical relationships in several Member States. Indeed, both  All3Media  and  Discovery  are
    active on the supply side of the market for the production of general entertainment TV content (i.e., non-film, non-sports)  and Liberty and
    Discovery are active on the demand side of this market (Liberty acquires sports TV content; Discovery  acquires  general  entertainment  and
    sports TV content). Moreover, All3Media and Discovery are active on the supply side of the market for the licensing of  broadcasting  rights
    for general entertainment TV content (i.e., non-film, non-sports)[33] and Liberty and Discovery are active on the demand side of this market
    (both acquire broadcasting rights for films, sports and general entertainment TV content). In  addition,  Liberty  and  Discovery  are  also
    active in the wholesale supply of TV channels, which is downstream of the markets for the production of TV  content  and  the  licensing  of
    broadcasting rights for TV content, where each of All3Media and Discovery are active.

65) However, none of these vertical relationships give rise to any affected markets as the Parties' combined shares are well below 30% on any of
    the relevant markets where such vertical relationships exist. For completeness, the Commission notes that, with  regard  to   possible  sub-
    markets for the wholesale supply of Pay-TV TV channels relating to sports, Liberty and  Discovery's  combined  share  would  exceed  30%  in
    Belgium and in the Netherlands, being [80-90]% in Belgium (Liberty: [20-30]% via its Sporting Telenet channel; Discovery: [50-60]%  via  its
    Eurosport channels) and [50-60]% in the Netherlands (Liberty: [10-20]% via  its  Sport1  channel;  Discovery:  [40-50]%  via  its  Eurosport
    channels). In any event, irrespective of the exact product market definition, given that All3Media does neither produce nor  license  sports
    TV content in either Belgium or the Netherlands, such vertical relationships are purely potential: indeed, the type of content  produced  by
    All3Media (i.e., general entertainment TV content) is not currently used by either of Liberty or Discovery  as  an  input  for  any  of  the
    channels that they operate in Belgium or in the Netherlands.

66) Moreover, the market investigation did not provide indications as to  any  likely  anti-competitive  effects  resulting  from  the  proposed
    transaction as regards the vertical relationship between the Parties' activities.

67) As regards input foreclosure, the majority of the respondents to the market investigation considered it unlikely that All3Media would, post-
    transaction, refuse to provide the TV content it produces and/or licenses to third-party broadcasters and  supply  it  only  to  Liberty  or
    Discovery. Moreover, although the majority of the broadcasters viewed access to All3Media's content as important in order to compete on  the
    market for the wholesale supply of TV channels or retail of TV services,[34] they also considered that  a  sufficient  number  of  competing
    production companies will remain active, post-transaction, on the relevant markets. These companies are  and  will  be  able  to  supply  TV
    content similar to that produced by All3Media.[35]

68) As regards customer foreclosure, the respondents to the market investigation considered it equally unlikely that Liberty or Discovery would,
    post-transaction, refuse to procure TV content from third-party producers and source it only from All3Media. First,  neither  Discovery  nor
    Liberty would have an incentive to entirely source their need of TV content from All3Media since it is key for TV channels  to  be  able  to
    offer a broad range of different types of TV content in order to reach a wide audience.[36] Second,  it  is  unlikely  that  one  production
    company would be able to supply sufficient volume to cater for a channel's entire programme schedule.[37] Third, there would be a variety of
    competing broadcasters active on the market in each of the EEA Member States where Liberty or  Discovery  are  active,  to  which  competing
    producers and/or licensors of TV content could provide their services and content.

69) The Commission therefore considers that the proposed transaction does not give rise to serious doubts  as  to  its  compatibility  with  the
    internal market as a result of anti-competitive vertical effects in the markets for the production of TV content and for  the  licensing  of
    broadcasting rights for TV content.

3 Cooperative effects of a joint venture

70) Pursuant to Article 2(4) of the Merger Regulation, when the Commission assesses the impact of the creation of a  joint  venture  within  the
    meaning of Article 3 of the Merger Regulation, it should also apprise whether the proposed transaction will have the object or the effect of
    coordinating the competitive behaviour of undertakings that remain independent within the meaning of Article 101 TFEU.  That  could  be  the
    case when two or more parent companies retain, to a significant extent, activities in the same market as the joint venture or  in  a  market
    which is downstream or upstream from that of the joint venture.[38]

71) The Notifying Parties are both active in the market for the wholesale supply of TV  channels  in  Belgium  and  the  Netherlands.  Discovery
    supplies a range of TV channels to TV retailers across the EEA, among which  Belgium  and  the  Netherlands.  In  the  Netherlands,  Liberty
    supplies its Pay-TV channels Film1 and Sport1. In Belgium, Liberty supplies Sporting Telenet. The market for  the  wholesale  supply  of  TV
    channels is vertically related to the market for the production of other TV content and the market for the licensing of broadcasting  rights
    to other TV content, where All3Media is active.

72) In the market for the wholesale supply of TV channels, as well as in each of the markets for the wholesale supply of FTA channels and Pay-TV
    channels, and in the possible segments of the latter market of the wholesale supply of  basic  and  premium  Pay-TV  channels,  Liberty  and
    Discovery's combined market share in terms of viewers is limited in both Belgium (Liberty: less than  [0-5]%;  Discovery:  [0-5]%)  and  the
    Netherlands (Liberty: less than [0-5]%; Discovery: [5-10]%). However, in the possible sub-segment regarding the wholesale supply  of  Pay-TV
    sports channels, Liberty and Discovery's combined market shares are more significant, more precisely, [80-90]% in Belgium (Liberty: [20-30]%
    via its Sporting Telenet channel; Discovery: [50-60]% via its Eurosport channels) and [50-60]% in the Netherlands (Liberty: [10-20]% via its
    Sport1 channel; Discovery: [40-50]% via its Eurosport channels).

73) The Commission nonetheless considers that the proposed transaction will not lead to the coordination of the competitive behaviour of Liberty
    and Discovery for a number of reasons.

74) First, All3Media is not active in the possible market for the wholesale supply of sports TV channels in Belgium and/or the Netherlands.

75) Second, while active at a level of the value chain that could potentially be considered to be upstream to that of the  wholesale  supply  of
    sports TV channels in Belgium and/or the Netherlands – that is to say the market for the production of  TV  content  and  the  licensing  of
    broadcasting rights for TV content – All3Media is not active in the production and/or licensing of sports TV content, which could constitute
    an input for the downstream activities of Liberty and Discovery.

76) Third, the activities of the joint venture are insignificant if compared to those of Liberty and Discovery. In Belgium, All3Media  generated
    turnover of EUR […] million, whereas Discovery generated turnover of EUR […] million and Liberty of EUR […]  billion.  In  the  Netherlands,
    All3Media generated turnover of EUR […] million, whereas Discovery generated turnover of EUR […] million and Liberty of EUR […] million.

77) Finally, the market investigation did not reveal any concerns of coordination of the competitive behaviour of the parent companies linked to
    the acquisition of joint control over All3Media.

78) Therefore, the Commission concludes that the acquisition of joint control of All3Media by Liberty and Discovery is not likely to lead to the
    coordination of Liberty and Discovery's competitive behaviour in the market for the wholesale supply of  TV  channels  in  Belgium  and  the
    Netherlands.

       CONCLUSION

79) For the above reasons, the European Commission has decided not to oppose the notified operation  and  to  declare  it  compatible  with  the
    internal market and with the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the Merger Regulation.

For       the        Commission                                                                                                          (signed)
                                Joaquín ALMUNIA
Vice-President

-----------------------
 [1]  OJ L 24, 29.1.2004, p. 1 ('the Merger Regulation'). With effect from 1 December 2009, the Treaty on the Functioning of the European  Union
    ('TFEU') has introduced certain changes, such as the replacement of 'Community' by 'Union' and 'common market'  by  'internal  market'.  The
    terminology of the TFEU will be used throughout this decision.

 [2]  On 14 March 2014, Liberty notified to the Commission its proposed acquisition of Dutch cable operator Ziggo (Case M.7000 – Liberty  Global
    / Ziggo). On 8 May 2014, the Commission opened an in-depth investigation into the proposed transaction. The current deadline for  the  phase
    II investigation is 3 November 2014.

 [3]  Liberty also supplies voice telephony and broadband internet services, primarily over its cable networks.

 [4]  In the Netherlands, Liberty operates the Film 1 and Sport 1 channels. In Belgium, Liberty produces TV channels, the majority of which  are
    distributed only over Liberty's Telenet retail TV service. It does wholesale supply one channel, Sporting Telenet, to a  Belgian  retail  TV
    service provider. On 18 August 2014, Liberty notified to the Commission its proposed acquisition of De Vijver Media NV ("DVM") (Case  M.7194
    – Liberty Global / Corelio / W&W / De Vijver Media). The current deadline for the phase I investigation is 22 September  2014.  In  Belgium,
    DVM broadcasts the Dutch-language Free-to-Air TV channels "Vier" and "Vijf". In addition, DVM  produces  Dutch-language  TV  content  mainly
    intended for captive use in DVM's own channels. Finally, DVM is also active in the sale of advertising space on several TV channels.

 [5]  Liberty previously owned Chellomedia (which produces and sells pay TV channels and content  in  various  countries  in  Europe).  However,
    Liberty sold its Chellomedia division to the US company AMC in 2014.

 [6]  John Malone holds minority shareholdings in Discovery, Liberty Interactive Corporation ("LIC")  and  Liberty  Media  Corporation  ("LMC").
    However, according the Notifying Parties, even assuming that John Malone controls these companies, their activities would not have an impact
    on the competitive analysis of the proposed transaction. Indeed, although LIC also operates a shopping TV channel,  such  channel  does  not
    contain any general entertainment content comparable to the one produced/licensed by All3Media. Moreover, except for  LMC's  limited  (below
    3%) shares of ownership in certain companies active in the distribution of individual content in the EEA,  the  Notifying  Parties  are  not
    aware of any LMC business interest active in the supply or acquisition of TV content or related markets in the EEA.

 [7]  Indeed, based on available information, it appears that no shareholder, whether solely or jointly, has the ability (whether de jure or  de
    facto) to exercise more than half of the voting rights  at  Discovery's  general  shareholder  meeting  and/or  to  appoint  (or  block  the
    appointment of) the majority of the members of the Discovery Board of Directors.

 [8]  As part of its production and distribution business, aside from TV content, a number of All3Media's production businesses produce  content
    for digital platforms including the internet and mobile platforms. All3Media also has limited talent management activities via its Objective
    Talent Management business. However, given All3Media's limited talent management activities and the fact that neither Liberty nor  Discovery
    has overlapping talent management activities, talent management is not considered further in this decision.

 [9]  Turnover calculated in accordance with Article 5 of the Merger Regulation.

 [10]       M.5121 – News Corp / Premiere, para 28.

 [11]       See, e.g., M.5932 – News Corp / BSkyB; M.4353 – Permira / All3Media Group; and M.6880 – Liberty Global / Virgin Media.

 [12]       Until 2013, Liberty's subsidiary Telenet was active to a very limited extent in  the  sub-licensing  of  individual  TV  content  in
    Belgium. However, these activities ceased in 2014.

 [13]       All3Media does, however, acquire limited rights which it sub-licenses to wholesale TV channels and VOD service providers.

 [14]       See footnote 4 for more details regarding Liberty's activities in Belgium.

 [15]       In previous decisions, the Commission identified six main technical means of delivering TV content to end  users,  namely  via:  (1)
    analogue terrestrial television and digital terrestrial television ("DTT"); (ii) satellite (also referred to as  Direct  to  Home  ("DTH"));
    (iii) cable; (iv) Internet Protocol Television ("IPTV"); (v) the internet more generally; and (vi) mobile technologies. See M.6880 – Liberty
    Global / Virgin Media, para. 44; M.5932 – News Corp / BSkyB, para. 46.

 [16]       M.1574 – Kirch / Mediaset, para 14; M.1943 – Telefónica / Endemol, para 8; M.1958 – Bertelsmann / GBL / Pearson TV, paras 11-12; and
    M.4353 – Permira / All3Media Group, paras 11-12.

 [17]       See Commission questionnaire Q1 - Questionnaire for acquirers of TV content/TV channel suppliers, question 10.

 [18]       See Commission questionnaire Q1 - Questionnaire for acquirers of TV content/TV channel suppliers, question 11.

 [19]       See Commission questionnaire Q1 - Questionnaire for acquirers of TV content/TV channel suppliers, questions 11-12.

 [20]       See Commission questionnaire Q2 - Questionnaire for producers/licensors of audio-visual TV content, question 9.

 [21]       See Commission questionnaire Q1 - Questionnaire for acquirers of TV content/TV channel suppliers, questions 13-15.

 [22]       See M.6369 – HBO / Ziggo / HBO Nederland, paras 18-20; M.6880 – Liberty Global / Virgin Media, para 19. Moreover, as regards sports,
    the Commission has also previously considered a distinction between football and other sports  and  further  distinctions  within  football,
    e.g., between regular football events and football events that are played more intermittently (M.4519 – Lagardère / Sportfive, para. 10.  As
    regards films, the Commission has considered distinguishing between US-produced films and other films (M.2876 – News Corp /  Telepiù,  paras
    58 and 61).

 [23]       M.6369 – HBO / Ziggo / HBO Nederland, para 18.

 [24]       M.1574 – Kirch / Mediaset, para 17; M.1958 – Bertelsmann / GBL / Pearson TV, para 14; M.4353 – Permira / All3Media Group, para 15.

 [25]       M.5932 – News Corp / BSkyB, paras. 73-75; M.6880 – Liberty Global / Virgin Media, para 24.

 [26]       See Commission questionnaire Q1 - Questionnaire for acquirers of TV content/TV channel suppliers, question 33.

 [27]       M.5932 – News Corp / BSkyB, paras 80-85; M.4504 – SFR / Télé 2 France, paras 37-42.

 [28]       M.2876 – News Corp / Telepiù, para 76; M.6880 – Liberty Global / Virgin Media, paras 36-37.

 [29]       M.6369 – HBO / Ziggo / HBO Nederland, para 39; M.6880 – Liberty Global / Virgin Media, para 41.

 [30]       M.5932 – News Corp / BSkyB, paras. 86-88; M.6880 – Liberty Global / Virgin Media, para 41.

 [31]       See Commission questionnaire Q1 - Questionnaire for acquirers of TV content/TV channel suppliers, question 41.

 [32]       See Commission questionnaire Q1 - Questionnaire for acquirers of  TV  content/TV  channel  suppliers,  question  42  and  Commission
    questionnaire Q2 - Questionnaire for producers/licensors of audio-visual TV content, question 57.

 [33]       For completeness, Discovery's Eurosport channels also license a limited amount of their sports rights to  third  parties.  In  2012,
    Eurosport's licensing activities amounted to approximately EUR […] million.

 [34]       According to some respondents, All3Media would have some very defining and excellent shows and would be the UK’s largest independent
    production company. See Commission questionnaire Q1 - Questionnaire for acquirers of TV content/TV channel suppliers, question 41.

 [35]       See Commission questionnaire Q1 - Questionnaire for acquirers of TV content/TV channel suppliers, question 42.

 [36]       See Commission questionnaire Q1 - Questionnaire for acquirers of TV content/TV channel suppliers, questions 37 and 38.

 [37]       See Commission questionnaire Q1 - Questionnaire for acquirers of TV content/TV channel suppliers, questions 37 and 38.

 [38]       In addition to this scenario, a risk of coordination could also occur when two or more  parent  companies  retain  activities  in  a
    neighbouring market closely related to the market in which the joint venture is active.

-----------------------
 In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EC)  No  139/2004
 concerning non-disclosure of business secrets and other confidential information.  The  omissions  are  shown  thus  […].  Where  possible  the
 information omitted has been replaced by ranges of figures or a general description.

                                                                  PUBLIC VERSION

                                                                 MERGER PROCEDURE