CELEX: 32014M7288
Language: en
Date: 2014-09-09 00:00:00
Title: Commission Decision of 09/09/2014 declaring a concentration to be compatible with the common market (Case No COMP/M.7288 - VIACOM / CHANNEL 5 BROADCASTING) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

Brussels, 9.9.2014
C(2014) 6461 final

                                        [pic]

                                        |                                                             | To the notifying party:                                                 |

Dear Sir/Madam,

Subject:    Case M.7288 - Viacom/Channel 5 Broadcasting
Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004[1]

 1. On 4 August 2014, the European Commission received notification of a proposed concentration pursuant to Article 4 of the  Merger  Regulation
    by which the undertaking Viacom Inc. ("Viacom", United States) acquires within the meaning of  Article  3(1)(b)  of  the  Merger  Regulation
    control of the whole of Channel 5 Broadcasting Limited ("Channel 5", United Kingdom) by way of purchase  of  shares.  Viacom  is  designated
    hereinafter as the "Notifying Party" and Viacom and Channel 5 are designated as "Parties" to the proposed transaction.

THE PARTIES

 2. Viacom is a global entertainment content company that  creates  television  programmes,  motion  pictures,  short-form  videos,  application
    ("apps"), games, consumer products, social media and other entertainment content.  Viacom  reaches  audiences  in  over  160  countries  and
    territories. Viacom is controlled by National Amusement Inc. ("NAI"),  in  turn  controlled  by  Sumner  Redstone,  who  also  controls  CBS
    Corporation ("CBS").

 3. Channel 5 is one of the four UK Public Sector Broadcasters ("PSB"). Channel 5 operates three free-to-air ("FTA")  television  channels  plus
    four time-shifted variants of those channels and one Pay-TV channel. Channel 5 also operates Demand 5,  a  catch-up  and  archive  video-on-
    demand ("VOD") service accessible through connected TVs as well as on PC, tablet and mobile devices. Furthermore, Channel  5  owns  a  small
    production studio and its own advertising ("ad") sales house, Channel 5 Sales.

THE CONCENTRATION

 4. The proposed transaction involves the acquisition of sole control of Channel 5 by Viacom. Pursuant to a Share Purchase  Agreement  dated  30
    April 2014, Viacom will acquire the whole of the issued ordinary share capital of Channel 5 for consideration of an amount in  cash  of  GBP
    450 million (approximately EUR 547 million).

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

EU DIMENSION

 6. The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000 million[2] (Viacom: […];  Channel  5:  […]).
    Each of them has an EU-wide turnover in excess of EUR 250 million (Viacom: EUR […]; Channel 5: […]), but only Channel 5 achieves  more  than
    two-thirds of its aggregate EU-wide turnover within one and the same Member State, namely the UK.

 7. The notified operation therefore has an EU dimension within the meaning of Article 1(2) of the Merger Regulation.

RELEVANT PRODUCT AND GEOGRAPHIC MARKETS

8. The Parties are both active in the provision of audio visual content in the UK.[3] Therefore, the Parties'  activities  overlap  in:  (i)  the
   licensing/acquisition of broadcasting rights to audio visual content, (ii) the wholesale supply  of  television  channels,  (iii)  the  retail
   supply of audio visual content to end users and (iv) the supply of advertising.

1 Licensing/acquisition of broadcasting rights to audio visual content

           Product market definition

 9. Audio visual TV content comprises "entertainment products" (such as films, sport events, TV programmes, etc.) that can be broadcast via  TV.
    TV broadcasting rights belong to the creators of these products, who license them to broadcasters (which then incorporate them into a linear
    stream of content – TV channel) or content platform operators which retail directly to end users on a VOD/Pay-Per-View basis.

10. The Notifying Party does not take a position on the delineation of the product market for licensing/acquisition of  broadcasting  rights  to
    audio visual content.

11. In its past decisions, the Commission has identified separate product markets for the licensing of broadcasting rights for individual  audio
    visual TV content for Pay-TV and for Free-To-Air ("FTA"), although it ultimately left open the exact product market definition.[4]

12. The Commission has also found that, from both a demand-side and supply-side perspective, certain types of content bought by Pay-TV operators
    are not substitutable with each other. Accordingly, the Commission has considered (i) sports events, (ii) premium films and (iii)  other  TV
    content (such as documentaries, youth programmes, etc.) as separate product markets, although it ultimately  left  open  the  exact  product
    market definition.[5]

13. As regards the licensing of broadcasting rights for premium films, in past decisions, the Commission has identified separate markets for the
    following different exhibition windows, although it ultimately left open the exact product market definition: (1)  Video-on-Demand  ("VOD");
    (2) Pay-per-view ("PPV"); (3) first Pay-TV window; (4) second Pay-TV window; and (5) FTA TV.[6]

14. In the present case, the Commission considers that the exact product market definition can be left open, as the  proposed  transaction  does
    not give rise to competition concerns under any possible market definition.

           Geographic market definition

15. The Notifying Party does not take a position on the delineation of the geographic  market  for  the  licensing/acquisition  of  broadcasting
    rights to audio visual content.

16. The Commission previously considered that the market for the licensing of broadcasting rights to audio visual TV content is either  national
    in scope or potentially comprises a broader linguistically homogeneous area. However, the Commission left open the exact  geographic  market
    definition.[7]

17. In the present case, the Commission considers that the exact geographic scope of the market for the  licensing/acquisition  of  broadcasting
    rights to audio visual content can be left open, as the proposed transaction does not give rise to competition concerns under  any  possible
    market definition.

2 Wholesale supply of television channels

           Product market definition

18. TV channel broadcasters acquire or produce individual audio visual content and package it into TV  channels.  These  TV  channels  are  then
    broadcast to end users via different distribution infrastructures (for example cable, satellite, internet, mobile, etc.)  either  on  a  FTA
    basis or on a Pay-TV basis (individually or as part of so-called "channel bouquets").[8]

19. The Notifying Party does not take a position on the delineation of the product market for the wholesale supply of television channels.

20. In past decisions, the Commission has identified a wholesale market for the supply of TV channels. Within this market,  the  Commission  has
    identified two separate product markets for (i) FTA channels and (ii) Pay TV channels.[9]

21. Within the market for the wholesale supply of Pay-TV channels, the Commission has also previously indicated that there is a  differentiation
    between "basic" and "premium" Pay TV channels (for example premium sports and movies channels). However, it has left open whether these  two
    categories of Pay TV channels constitute separate product markets.[10]

22. Finally, the Commission has also examined, but ultimately left open, whether the market should be further segmented  by  genre  or  thematic
    content (such as films, sports, news, youth channels, etc.).[11]

23. In the present case, the Commission considers that the exact product market definition can be left open, as the  proposed  transaction  does
    not give rise to competition concerns under any possible market definition.

           Geographic market definition

24. The Notifying Party does not take a position on the delineation of the geographic market for the wholesale supply of television channels.

25. In past decisions, the Commission considered that the market for the wholesale supply of television channels is either national in scope  or
    potentially comprises a broader linguistically homogeneous area. However, it left open the exact geographic market definition. [12]

26. In the present case, the Commission considers that the exact geographic scope of the market for the wholesale supply of television  channels
    can be left open, as the proposed transaction does not give rise to competition concerns under any possible market definition.

3 Retail supply of audio visual content to end users

           Product market definition

27. On the retail market for the supply of audio visual content to end users, the suppliers of linear and non-linear TV services on  the  supply
    side, serve end-customers who wish to access such services on the demand side.

28. The Notifying Party does not take a position on the delineation of the product market for the retail supply of audio visual content  to  end
    users and considers that the exact product market definition can be left open.

29. The Commission has in the past identified separate markets for the retail supply  of  (i)  FTA  and  (ii)  Pay-TV  services.  Moreover,  the
    Commission considered whether linear and non-linear services constitute separate product markets, but ultimately left open the exact product
    market definition.[13]

30. In the present case, the Commission considers that the exact product market definition can be left open, as the  proposed  transaction  does
    not give rise to competition concerns under any possible market definition.

           Geographic market definition

31. The Notifying Party does not take a position on the delineation of the geographic market for the retail supply of audio  visual  content  to
    end users.

32. The Commission has previously found the market for the retail supply of audio visual services to end users to be  national  in  scope  (when
    considering the Pay-TV side of the market)[14] or, at most, to comprise linguistically homogeneous areas, such as the UK and Ireland.[15]

33. In the present case, the Commission considers that the exact geographic scope of the market for the retail supply of audio visual content to
    end users can be left open, as the proposed transaction does not give rise to competition concerns under any possible market definition.

4 Supply of advertising

           Product market definition

34. The Notifying Party submits that the market for TV advertising should be considered as a whole and that it is not necessary to differentiate
    between FTA and Pay-TV. Furthermore, the Notifying Party submits that segmenting the TV advertising market by demographics would not reflect
    the reality of the market: the dynamic nature of programming allows broadcasters to compete with each  other  across  multiple  demographics
    over time.

35. In its past decisions, the Commission has drawn a distinction between online  and  offline  advertising[16],  based  on  two  main  factors:
    specificity and pricing. In terms of specificity, online advertising is capable of efficiently reaching a much more targeted audience and of
    allowing advertisers to know how many users  have  viewed  or  clicked  on  an  advertisement.  On  the  contrary,  offline  advertising  is
    traditionally unable to provide these features. In terms of pricing, the two have different pricing mechanisms: whereas offline  pricing  is
    measured in general criteria of impacts viewed by consumers, online advertising can be bought in a number of ways (such as cost per thousand
    page views, or based on a "cost per click").

36. As regards online advertising, in its decision in the Google/DoubleClick case, the Commission  considered  a  possible  distinction  between
    search and non-search advertising, but it ultimately left open the exact product market definition.[17]

37. As regards offline advertising, in its decision in the News Corps/BSkyB case, the  Commission  considered  an  overall  market  for  all  TV
    advertising in the UK.[18]

38. The large majority of respondents to the market investigation in the present case  confirmed  that  TV  advertising  represents  a  separate
    product market and that it is furthermore not relevant to sub-divide the market for TV advertising  by  broadcasting  method  (FTA  or  Pay-
    TV).[19] A number of respondents also indicated that the line between online advertising and TV advertising is becoming increasingly blurred
    due, in particular, to the rise of non-linear (video-on-demand) viewing.[20]

39. The Commission has also considered whether the market for TV advertising  should  be  further  segmented  by  target  audience.  The  market
    investigation showed that TV advertising space is usually procured on an annual basis and over a variety of target audiences (determined  on
    the basis of a number of criteria, sometimes cumulative such as age, gender and socio-economic status) and that differentiation by  targeted
    audiences is realised only at a later stage, when aggregators offer  their  clients  TV  advertising  space  tailored  on  their  needs.[21]
    Therefore, since on the demand side there is no differentiation based on different types of audiences, the Commission considers that  it  is
    not necessary to further segment the TV advertising market by target audience.

40. In line with previous Commissions decision and in the light of the results of the market investigation, the Commission takes the  view  that
    TV advertising constitutes a separate market. As regards online  advertising,  the  Commission  considers  that  the  exact  product  market
    definition can be left open, as the proposed transaction does not give rise to competition concerns under any possible market definition.

           Geographic market definition

41. The Notifying Party does not take a position on the delineation of the geographic market for the supply of advertising.

42. As regards the supply of TV advertising, the Commission considered in the past the relevant geographic market to be national in scope.[22]

43. The market investigation in the present case confirmed that the market for TV advertising is national in scope.

44. As regards online advertising, in its past decisions the Commission has considered  the  geographic  scope  of  the  market  to  be  divided
    alongside national or linguistic borders within the EEA.[23]

45. In line with previous decisions, the Commission takes the view that the market for TV advertising is national in scope.  As  regards  online
    advertising, the Commission considers that the exact geographic scope of the market for online advertising can be left open, as the proposed
    transaction does not give rise to competition concerns under any possible market definition.

Competitive Assessment

46. The proposed transaction gives rise to horizontal overlaps between the Parties' activities in the markets for (i) the  licensing/acquisition
    of broadcasting rights to audio visual content in the UK, (ii) the wholesale supply of television channels  in  the  UK,  (iii)  the  retail
    supply of audio visual content to end users in the UK, and (iv) the supply of advertising in the UK.[24]

47. The combined market share of the Parties does not exceed 20% in any of these markets  and  therefore,  according  to  paragraph  18  of  the
    Commission Guidelines on the assessment of horizontal mergers[25], the transaction does not give rise to any competition concerns. Given the
    high degree of concentration of the TV advertising market in the UK and the uncertainty regarding the future of Channel 5' ad  sales  house,
    the Commission's market investigation has focused on the market of TV advertising in the UK.

1 Licensing/acquisition of broadcasting rights to audio visual content in the UK

48. As regards the licensing of broadcasting rights for both Pay-TV and FTA (i.e. the supply side), Channel  5  does  not  license  broadcasting
    rights to third parties in the UK.[26] As a result, there is no overlap between the Parties with regard to  the  licensing  of  broadcasting
    rights in the UK under any possible market definition.

49. As regards the acquisition of broadcasting rights (i.e. the demand side), both Viacom and Channel 5 purchase broadcasting rights  to  "Other
    TV content". In this market, the combined market share of the Parties would be well below 20% ([5-10]%), with an insignificant increment  of
    [0-5]% brought about by the proposed transaction. The Notifying Party further confirmed that the combined market share of  the  Parties  for
    the possible sub-markets of the acquisition of broadcasting rights for (i) FTA and (ii) Pay-TV is also well below 20%.

50. In light of the above, the Commission concludes that the proposed transaction does not raise serious doubts as to its compatibility with the
    internal market on the market for the licensing/acquisition of broadcasting rights to audio visual content in the UK.

2 Wholesale supply of television channels in the UK

51. Both Viacom and Channel 5 provide at the wholesale level a set of channels to  television  broadcasters  or  other  distribution  platforms.
    Viacom operates the majority of its channels as Pay-TV channels (it operates three FTA channels: Viva, BET and Colors),  whereas  Channel  5
    operates the majority of its channels as FTA channels (Channel 5 only offers the High Definition version of its main FTA channel (Channel  5
    HD) as a paying channel).

52. On the broader market for the wholesale supply of television channels, the Parties activities overlap to a negligible  extent  and,  in  any
    case, with a combined market share well below 20% in terms of viewing share ([5-10]%) and a limited increment of [0-5]%.

53. On the possible market for the wholesale supply of FTA channels,  the combined market share of the Parties would still be well below 20%  in
    terms of viewing share ([5-10]%) and with a negligible increment (less than [0-5]%).

54. On the possible market for the wholesale supply of Pay-TV channels, the combined market share of the Parties would  be  well  below  20%  in
    terms of viewing share ([10-20]%) with a negligible increment ([0-5]%). If considering a possible sub-market for for the wholesale supply of
    basic Pay-TV channels, the combined market share of the Parties would still be below 20% in terms of audience ([10-20]%), with a  negligible
    increment of [0-5]%. Finally, no overlap would occur on the possible market for the wholesale supply of premium Pay-TV channels.

55. If considering a possible distinction by theme/genre, the combined market share of the Parties would be in any case  below  20%  ([0-5]%  in
    terms of audience for "Other TV content").

56. In light of the above, the Commission concludes that the proposed transaction does not raise serious doubts as to its compatibility with the
    internal market on the market for the wholesale supply of television channels in the UK.

3 Retail supply of audio visual content to end users in the UK

57. Channel 5 makes its content available to consumers via broadcasting of FTA TV channels (linear) and its Demand 5 VOD  service  (non-linear),
    which is also free to access. Viacom operates almost exclusively at the wholesale level. Nonetheless, it retails some of its content to  end
    users via VOD services available on its website which is not provided free. Finally, Viacom retails three linear UK FTA channels (Viva,  BET
    and Colors).

58. Therefore, Viacom and Channel 5's retail activities overlap only on the possible markets for (i) the retail provision of linear FTA  content
    and (ii) the market for the provision of non-linear content (combining non-linear FTA and non-linear pay content).

59. As regards the retail provision of linear FTA content, the combined market share of the Parties would be well below 20% in terms of audience
    ([5-10]%) and with a negligible increment (less than [0-5]%).

60. Viacom is only active in the retail supply of non-linear pay services, while Channel 5 is only active in the  retail  supply  of  non-linear
    free services. If considering a possible market for the provision of  non-linear  content  (combining  non-linear  FTA  and  non-linear  pay
    content), the combined market share of the Parties would be insignificant and, in any case, far below 20% ([0-5]%).

61. In light of the above, the Commission concludes that the proposed transaction does not raise serious doubts as to its compatibility with the
    internal market on the market for the retail supply of audio visual content to end users in the UK.

4 Supply of advertising in the UK

62. The proposed transaction will give rise to horizontal overlaps of the Parties' activities on the markets for (i) TV advertising in  the  UK,
    and (ii) online advertising in the UK.

63. As regards the horizontal overlap on the market for online advertising, the combined market share of the Parties is insignificant under  any
    possible market definition (less than [0-5]% in 2013).

64. The supply chain of the TV advertising market is described below.

    [pic]

65. Broadcasters, such as the Parties, generate revenue on the market for  TV  advertising  by  selling  television  advertising  "impacts"[27],
    programme sponsorship and other advertising opportunities on their television channels.

66. Ad sales houses sell TV advertising airtime on behalf of broadcasters. Ad sales houses allow  broadcasters  to  pool  their  impacts,  lower
    transaction costs, increase ad sales management and sales expertise and offer buyers a broader portfolio than each broadcaster  could  offer
    individually.

67. On the same market, advertisers are seeking to market a product or service to their target audience. Most  advertisers  choose  to  purchase
    advertising impacts via a media buyer, rather than directly from a TV channel's ad sales house.

68. Media buyers negotiate for the purchase of advertising impacts from ad sales houses that represent broadcasters.  By  pooling  together  the
    demand of many advertisers, media buyers are able to secure more favourable pricing terms at a lower transaction cost than would be possible
    were each advertiser to purchase directly. Media buyers then compete for advertisers partly on the basis  of  the  more  favourable  pricing
    terms that they have extracted from the ad sales houses. Media buyers usually negotiate with ad sales houses on a forward annual  basis  and
    make "bulk deals" for their advertiser clients.[28] There are five major media buyers in the UK:  Group  M  (WPP),  Omnicom,  Aegis,  Vivaki
    (Publicis) and Magna.

69. As it can be noted from the above graph, on the market for the supply of TV advertising, on the supply side, ad sales  houses  commercialise
    "impacts"[29] generated by TV channels to media buyers or directly (more rarely) to advertisers. Some ad sales houses sell the TV impacts of
    both their own and third party channels (such as Sky Media and Channel 4); other ad sales house (such as the Channel 5,  Disney  or  Turner)
    only sell the TV impacts generated by their own TV channels.

70. The negotiations concerning TV "impacts" thus take place between the ad sales house and the media buyer. Ad sales houses are responsible for
    managing the relations with the media buyers and negotiating contracts and terms and conditions for the broadcasters.

71. Channel 5 currently monetises its advertising impacts by operating its own ad sales house that deals directly with the media buyers. Channel
    5 is thus present at both levels, as a broadcaster generating TV "impacts" and as a supplier of TV advertising.

72. By contrast, Viacom is not present in the TV advertising market itself, but only as a broadcaster, which is upstream of the  TV  advertising
    market. Viacom monetises the TV advertising impacts generated by its TV channels in the UK by wholesaling those impacts to  Sky  Media,  the
    advertising sales house owned by BSkyB. According to the agreement between Viacom and Sky Media, […].

73. On the market for the supply of TV advertising in the UK, the Parties would account for [10-20]% in terms of commercial impacts (Channel  5:
    [10-20]%; Viacom: [0-5]%) and [10-20]% in terms of revenues (Channel 5: [5-10]%; Viacom: [0-5]%) with an increment of [0-5]%.[30]  The  main
    competitors of the Parties are ITV ([40-50]% - revenues; [30-40]% - impacts), Channel 4 ([20-30]% - revenues; [20-30]% - impacts) and  BSkyB
    ([10-20]% - revenues; [10-20]% - impacts).

74. As it can be seen from the figures above, the UK market for the supply of TV advertising is a rather concentrated market,  where  the  first
    four ad sales houses account for more than 90% of the total market size. In the eventuality where, post-transaction, Channel  5's  ad  sales
    house were to close down and its advertising impacts would be commercialised by one of the other three main ad sales houses, this could lead
    to further concentration on the supply side of the market.

75. The Commission has thus conducted a market investigation with the view to assessing the impact of the proposed transaction on the market for
    TV advertising in the UK, including as regards the future of Channel 5's ad sales house.

1 View of the Notifying Party

76. The Notifying Party submits that Viacom's decision to acquire Channel 5 was made in the context of  the  company's  plans  to  maintain  the
    Channel 5 ad sales house independent. It further submits that, even considering a possible closure of Channel 5 ad sales house's activities,
    this would not result in any impediments to effective competition.

77. As regards the likelihood of the closure, the Notifying Party claims […][31] […].

78. First, the Notifying Party notes that in terms of the rationale of the transaction, […].

79. Second, […].

80. Third, […].

81. Fourth, […].

82. Fifth, […].

83. Finally, Viacom's executives have issued public statements announcing that Channel 5 ad sales house would remain independent.  Since  Viacom
    is a US public listed company, there would be significant regulatory and other  legal  consequences  for  making  inaccurate  or  misleading
    statements.

84. Even assuming an unlikely closure of Channel 5 ad sales house, the Notifying Party submits that this would not have any negative effects  on
    competition in the UK TV advertising market.

85. First, the Notifying Party explains that the negotiating power of the ad sales house predominantly derives from the differentiation  in  the
    underlying programming of a channel and its programmes' attractiveness, not from scale. Therefore, a change in  management  of  Channel  5's
    advertising sales would not mean a change in the attractiveness of the channel itself.

86. Second, ad sales houses' negotiating power would be weak. Indeed, the Notifying Party explains that television advertising is an  archetypal
    high fixed cost, low variable cost business, as there are considerable upfront investments. A failure to sell impacts by an ad  sales  house
    would therefore represent either a failure to cover fixed costs or a loss of pure profit. Therefore, ad  sales  houses  cannot  threaten  to
    retain advertising space, nor can they limit output in order to raise prices.

87. Third, media buyers would enjoy considerable buying power. In fact, by pooling together the demand of many  advertisers,  media  buyers  are
    able to secure more favourable pricing terms at a lower transaction cost than each single advertiser. Moreover,  the  credibility  of  their
    threat to switch supplier of advertising would be a strong disciplining factor for ad sales houses.

2 Assessment

88. Respondents to the market investigation confirmed the position of Channel 5's ad sales house as the smallest  of  the  four  main  ad  sales
    houses on the TV advertising market in the UK with approximately [5-10]% market share in revenues and [10-20]% in advertising impacts.[32]

89. On the supply side of the market, the majority of customers confirmed that the attractiveness of an ad sales house  mainly  depends  on  the
    attractiveness of the channels it offers in its portfolio and the diversity of advertising impacts it can offer.[33]  While  Channel  5  has
    national audience reach, the market investigation also showed that none of its TV programmes falls within the 100 most popular TV programmes
    in the UK.[34]

90. As regards market entry, some respondents reported a number of obstacles to setting up an ad sales house in  the  UK  (such  as  securing  a
    sufficiently attractive portfolio of channels and achieving sufficient scale  of  audiences  to  attract  potential  advertisers  and  media
    buyers). However, it was also mentioned that two new small ad sales houses have recently entered the market (Axiom Media  and  Ethnic  Media
    Sales).[35]

91. On the demand side of the TV advertising market in the UK, there are five major media buyers aggregating advertising demand: Group  M  (WPP)
    (30-35%), Omnicom (10-15%), Aegis (10-15%), Vivaki (Publicis) (10-15%) and Magna (approximately 5%).[36] The market investigation  generally
    confirmed the existence of some indication of buyer power.

92. The majority of the respondents confirmed that most media buyers multisource in order to cover the advertising needs of  their  clients.[37]
    The market investigation showed that switching (at least a share of one media buyer's business) from Channel 5 to another ad sales house  is
    not particularly difficult for media buyers.[38]

93. All respondents, both competitors and customers, take the view that the impact of the transaction will be insignificant in a scenario  where
    the Channel 5 ad sales house will be maintained, as there would be no change to the market structure. Some respondents even pointed out that
    the transaction is likely to have positive aspects, as a combined Viacom-Channel 5 would be a  stronger  competitor  for  audiences  in  the
    UK.[39]

94. With regard to the unlikely scenario where the Channel 5 ad sales house were to be closed and the advertising generated by Channel 5 were to
    be contracted with one of the other three major ad sales houses, a limited number of respondents pointed out that the  market  would  become
    increasingly concentrated.[40]

95. As regards the supply side of the market, the transaction will not have any impact on the number of alternative suppliers for media  buyers'
    needs. Moreover, the Commission notes that the Parties' combined market share ([10-20]% in terms  of  revenues  and  [10-20]%  in  terms  of
    commercial impacts) would remain limited and well below any level giving rise to competition concerns.

96. Alternative competitors will remain active on the market for TV advertising in the  UK,  namely  ITV,  Channel  4  and  Sky  Media  (BSkyB),
    respectively accounting for [30-40]%, [20-30]% and [10-20]% in terms of advertising impacts.

97. The Commission notes that the demand side of the market is also relatively concentrated (with the four main media buyers accounting for  60-
    70% of the total market).

98. As regards more particularly a possible closure of Channel 5's ad sales house, the Commission considers that there is no clearly established
    link between the proposed transaction and the event of the cessation of Channel 5's ad sales house activities.

99. This finding is supported by the facts submitted by the Notifying Party. First, […][41], […].

100. Second, […].

101. Third, […].

102. In this regard, […][42] […][43] confirm Viacom's intention to maintain the Channel 5  independent  ad  sales  house  post-transaction.  This
    decision has also been reflected by the statements made by Viacom's management to the press since then.[44]

103. Finally, as regards possible options for outsourcing the Viacom and Channel 5 ad sales function, […][45][…].[46]

3 Conclusion

104. In light of the above, the Commission concludes that the proposed transaction does not raise serious doubts as  to  its  compatibility  with
    the internal market on the markets for (i) the supply of TV advertising in the UK and (ii) the supply of online advertising in the UK.

CONCLUSION

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

[3]   Viacom operates the following TV channels: BET, Colors, MTV, MTV Base, MTV Classic, MTV Dance, MTV  Hits,  MTV  Live  HD,  MTV  Music,  MTV
Rocks, VH1, VIVA, Nickelodeon, Nicktoons, Nick Jr., Nick Jr. 2, Comedy Central and Comedy Central extra. Channel  5  operates  the  following  TV
channels: Channel 5, 5*, 5USA and Demand5.

[4]   Commission decision of 21 December 2010 in Case M.5932 News Corp/BSkyB, paragraph 6.

[5]   Commission decision of 21 December 2011 in Case M.6369 HBO/Ziggo/HBO Nederland, paragraphs 18-21.

[6]   Commission decision of 21 December 2011 in Case M.6369 HBO/Ziggo/HBO Nederland, paragraph 18.

[7]   Commission decision of 2 April 2003 in Case M.2876 Newscorp/Telepiù, paragraph 62; Commission decision of 21 December 2010 in  Case  M.5932
News Corp/BSkyB, paragraphs 73-75.

[8]   Commission decision of 20 September 2013 in Case M.6990 Vodafone/Kabel Deutschland, paragraph 30.

[9]   Commission decision of 18 July 2007 in Case M.4504 SFR/Télé 2 France, paragraphs 37-40; Commission decision of 21  December  2010  in  Case
M.5932 News Corp/BSkyB, paragraphs 80, 83 and 85; Commission decision of 21 December 2011 in Case M.6369 HBO/Ziggo/HBO Nederland, paragraph 24.

[10]  Commission decision of 2 April 2003 in Case M.2876 Newscorp/Telepiù, paragraph 76; Commission decision of  18  July  2007  in  Case  M.4504
SFR/Télé 2 France, paragraphs 41-42; Commission decision of 21 December 2010 in Case M.5932 News Corp/BSkyB, paragraph  85;  Commission  decision
of 21 December 2011 in Case M.6369 HBO/Ziggo/HBO Nederland, paragraphs 24 and 27.

[11]  Commission decision of 2 April 2003 in Case M.2876 Newscorp/Telepiù, paragraph 76; Commission decision of  18  July  2007  in  Case  M.4504
SFR/Télé 2 France, paragraphs 41-42; Commission decision of 26 August 2008 in Case M.5121 News Corp/Premiere, paragraph 35;  Commission  decision
of 21 December 2010 in Case M.5932 News Corp/BSkyB, paragraph 81.

[12]  Commission decision of 21 December 2010 in Case M.5932 News Corp/BSkyB, paragraph 88.

[13]  Commission decision of 25 June 2008 in Case M.5121 News Corp/Premiere, paragraph 21.

[14]  See Commission decision of 15 April 2013 in Case M.5734 Liberty Global Europe/Unitymedia, paragraph 40;  Commission  decision  of  18  July
2007 in Case M.4504 SFR/Télé2 France, paragraph 48.

[15]  See Commission decision of 15 April 2013 in Case M.6880 Liberty Global/Virgin Media, paragraph 54.

[16]  Commission decision of 21 December 2010 in Case M.5932 News Corps/BSkyB, paragraph 262; Commission  decision  of  11  March  2008  in  Case
M.4731 Google/DoubleClick, paragraphs 45-46.

[17]  Commission decision of 11 March 2008 in Case M.4731 Google/DoubleClick, paragraphs 48-56.

[18]  Commission decision of 21 December 2010 in Case M.5932 News Corps/BSkyB, paragraph 267.

[19]  See replies to Commission Questionnaire to customers and competitors of 4 August 2014, question 6.

[20]  See replies to Commission Questionnaire to customers and competitors of 4 August 2014, question 6.

[21]  See replies to Commission Questionnaire to customers and competitors of 4 August 2014, questions 7, 8 and 10.

[22]  Commission decision of 14 June 2013 in Case M.6866 Time Warner/CME, paragraph 68; Commission decision  of 21 December 2010 in  Case  M.5932
News Corps/BSkyB, paragraph 270.

[23]  Commission decision of 11 March 2008 in Case M.4731 Google/DoubleClick, paragraph 84.

[24]  Since Channel 5 is only active in the UK, whereas Viacom is active in a number of EEA countries, the Parties' activities  overlap  only  in
the UK.

[25]  Commission Guidelines on the assessment of horizontal mergers under the  Council  Regulation  on  the  control  of  concentrations  between
undertakings (OJ C 31 of 5.2.2004, p. 5).

[26]  Channel 5 has limited licencing activities in the UK. Channel 5 generated only […] in 2013 from its licensing activities.

[27]  An "impact" can be defined as one viewing if an advertisement by one member of the relevant audience group.

[28]  As explained by one respondent to the market investigation, it may be that from time to  time,  a  media  buyer  would  make  a  series  of
advertiser-specific deals with an ad sales house.

[29]  TV impacts are the input for TV advertising measured by the audiences reached for different TV channels or programmes which is  a  function
of their attractiveness.

[30]  As indicated, Viacom is not present in the TV advertising market itself but currently wholesales its TV advertising impacts to  Sky  Media.
The Commission assessed the combined market position of the merged entity assuming the commercial impacts of Viacom  would  be  marketed  by  the
Channel 5 ad sales house together with those of Channel 5.

[31]  […].

[32]  See replies to Commission Questionnaire to customers and competitors of 4 August 2014, question 12.

[33]  See replies to Commission Questionnaire to customers and competitors of 4 August 2014, question 19.

[34]  See replies to Commission Questionnaire to customers and competitors of 4 August 2014, question 15.

[35]  See replies to Commission Questionnaire to customers and competitors of 4 August 2014, question 25.

[36]  See replies to Commission Questionnaire to customers and competitors of 4 August 2014, question 14.

[37]  See replies to Commission Questionnaire to customers and competitors of 4 August 2014, questions 21 and 22.

[38]  There was even an  instance where a media buyer has entirely switched away from Channel 5. It was however   noted  by  respondents  to  the
market investigation that it would be much more difficult to switch away from the ITV, Channel 4, and Sky Media  ad  sales  houses  because  they
represent "must-have" channels with extensive audience reach.

[39]  See replies to Commission Questionnaire to customers and competitors of 4 August 2014, questions 27 and 28.

[40]  See replies to Commission Questionnaire to customers and competitors of 4 August 2014, question 27.

[41]  […].

[42]  […].

[43]  […].

[44]  See annex 6 (p) to the Form CO, - Statements made by Philippe Dauman, Viacom's CEO to the press, from May and June 2014.

[45]  […].

[46]  […].

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                                                                  PUBLIC VERSION

 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.

                                                                 MERGER PROCEDURE