Axel Springer is at loggerheads with German regulators over the publisher's bid for Germany's biggest commercial television group, ProSiebenSat.1.
Axel Springer has said it will now weigh up its options
It had offered to sell a TV channel in order to ease the competition concerns of the German Cartel Office, but has withdrawn the plan for legal reasons.
Springer said that it was prepared to sell the ProSieben channel if the 2.5bn euro (£1.4bn) takeover was approved.
The watchdog wants the TV channel sold before any deal gets to go ahead.
"Following an analysis of this proposal, Axel Springer came to the conclusion that a sale of the TV station ProSieben prior to the consummation of the takeover is legally not an option," the company said in a statement.
Springer said that it now expected the cartel office to veto the deal and that it would consider its options, including an appeal.
On its request, the cartel office has extended its deadline for approving the takeover until 27 January.
The cartel office and Germany's media watchdog have both expressed concerns that the purchase would give Springer too much influence over the media and together with rival Bertelsmann, would create a virtual duopoly of the advertising market.