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The German Television Market
INDUSTRY
The German television market is the largest in Western Europe, with approximately 36.2 million television homes and
a combined cable, satellite and terrestrial penetration rate of approximately 92.6% based on approximately 39.1 million
households (as of March 2004). However, the German television market in general is less developed than most other
European television markets. For example, in 2004, Germany generated approximately €1 billion of premium subscription
revenues, compared with France and the UK which each generated over €2 billion, despite having smaller populations. In
addition, in 2003 television’s share of total advertising spend in Germany amounted to only 24% while the European average
was 31%.
The German television market has two distinctive features that distinguish it from most other television markets: (i) the
prevalence of the so-called transport model in the cable television market, and (ii) the separation of the cable networks into
two distinct levels (called Level 3 and Level 4) that historically have been under different ownership. Under the transport
model, the operators of distribution platforms, such as cable networks, merely provide the infrastructure and related services
required to distribute the television signal from the content providers to end-users. We believe this has led to a
disproportionate distribution of value among industry participants. Cable television, as the leading television signal
distribution platform, receives only a fraction of the total market value. The separation of cable networks into two levels, on
the other hand, impedes the marketing of new products and the delivery of new services.
The German basic television market comprises the provision, distribution and reception of program offerings that are
financed by public license fees and advertising revenues. End-users pay for the license fees that support the public
broadcasters and for the reception of television signals. Content providers lease transponder capacity from satellite operators,
pay for the costs of the terrestrial transmission infrastructure and pay carriage fees based on subscribers to cable network
operators. The following chart illustrates these relationships:
Customer Relationships for Satellite, Terrestrial and Cable Television in Germany (1)
(1) Data included in this chart is based on management estimates and various industry sources.
(2) “Gebühreneinzugszentrale” (GEZ) is a public authority that collects mandatory monthly fees on behalf of the public
broadcasters. Such fees are levied on all homes with a radio or television receiver to finance public broadcasters.
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