Gerhard Zeiler

May 27, 2009 World Screen

 

CEO
RTL Group
 
When RTL Television launched, in 1984, as RTL Plus, it brought German viewers a lot more than an alternative to the state broadcasters ARD and ZDF. It offered hit series from the U.S. networks and blockbuster movies from Hollywood, and aired newscasts that targeted younger viewers at various hours of the day. As RTL’s revenues grew, it was able to bid for sports rights and snagged the German Bundesliga games and Formula 1. It produced the first successful daily soap and went on to commission and create in-house two-thirds of its schedule, including adaptations of some of the most famous formats: Who Wants to Be a Millionaire?, Idols and Strictly Come Dancing. Among its imported shows today are House, Monk, CSI: Miami and Prison Break. Gerhard Zeiler was a big part of RTL Television’s success—in fact, he served as its CEO before being promoted to CEO of the entire RTL Group, which owns stakes in 45 TV channels and 33 radio stations in 11 countries, as well as FremantleMedia, which produces more than 10,000 hours of TV programming per year across 55 countries.
Zeiler and his team came up with the concept of running a “family of channels,” first implemented in Germany and comprised of RTL Television, RTL II, Super RTL, Vox, N-TV and a bouquet of digital channels. The goal of the family of channels is to accumulate viewers in today’s increasingly fragmented television landscape.
Engaging viewers with entertainment, news and sports, wherever they may be and whatever screen they may be watching, is still Zeiler’s main goal. In this exclusive interview, he talks about his company and his passion for programming.
 
TV EUROPE: RTL Television is celebrating its 25th anniversary. Over the years, what contributions has it made to the German TV market?
ZEILER: RTL Television has essentially rewritten the rulebook for German television. Before RTL came on the scene, there was a completely different way of thinking about TV. It was about education and a lot of programming reflected the personal tastes of the producer. Then RTL came along, and RTL has always put viewers at the heart of its efforts. That’s the reason why it has continuously set new trends across many genres.
RTL launched the first daily soap in Germany, along with a variety of comedy programming. In particular, RTL introduced the concept of ‘stripping’ programs across the week—airing shows in access prime time and daytime from Monday through Friday. This was a completely new concept in the market.
And RTL not only changed the entertainment sector, but also the news: the channel launched the first morning news program, the first lunchtime news and the first midnight news, and in all three categories RTL is still the market leader, at least among younger audiences.
 
TV EUROPE: Given the circumstances today, not only the economic downturn but also fragmentation in the market, is broadcasting still a good business to be in?
ZEILER: Yes, definitely, because TV is still the leading medium, and it will continue to be, even in the digital future. Whether you talk to consumers, viewers or advertisers, without TV, there is no growth in advertising, and TV is still the best medium for reaching a mass audience, especially now that there are so many distribution channels and small target audiences. And that is why broadcasting is still an excellent business to be in.
 
TV EUROPE: What growth do you still see in broadcasting, whether in Germany or looking at the RTL stations as a whole?
ZEILER: RTL Group will be seeing growth in many different areas. We are not only a broadcasting group, we also have FremantleMedia, our international production arm. FremantleMedia generates 1.2 billion euros in revenues, and has excellent growth prospects. “Can’t-afford-to-miss” content is becoming ever more valuable in the digital age as every new platform or distribution channel needs exciting content to attract consumers.
Secondly, of course, the audience is constantly changing. One of our slogans is, “We move with our audience,” and as we continue to invest more in digital and online viewing, there will be growth in the digital arena, as well. Thirdly, we believe that once the present worldwide economic downturn ends, advertising will grow again—and we, the TV industry, will benefit from that.
 
TV EUROPE: Where are the areas where you can cut costs, but on the other hand, where must you invest, even in tough times?
ZEILER: First of all, cost discipline is part of our DNA—not just something we resort to during crises. Every single year we review which costs are really necessary and which are not. Achieving maximum efficiency is an ongoing task for us.
Second, we are not private-equity investors looking at the figures on a quarterly basis—we are long-term investors. We know exactly what this industry is about and what it needs, and therefore we won’t cut into the heart of our business.
Of course, in a worldwide economic situation like the present one, there are some projects where we will decide, “OK, we can postpone that, and we’ll do it maybe next year or the year after that.” In other words, we always focus on the core and what is really necessary.
 
TV EUROPE: Have your stations been successful in moving content to their websites, but more importantly, have you been able to bring advertisers along too, or is that still a bit difficult?
ZEILER: Europe still is one or two years behind the U.S., because of structural developments. But the “catch-up TV” services have been a huge success. Here, programs which have already been broadcast on TV can be seen online, free of charge. Most media people are familiar with the success of the BBC’s iPlayer. But BBC’s iPlayer isn’t the only one of its kind: in France, M6 launched a similar service, M6 Replay, in March 2008, and our German profit center has a similar service in place called RTL Now.
RTL Now generates over 10 million views of complete episodes of series or shows each month. This means 300,000 programs are viewed online per day, and that’s just 12 months after the service was launched. I am 100-percent sure that the advertisers will follow. We are already catering to the advertising industry online—for example, with pre-roll ads that you can’t skip. I’m pretty sure this will be successful. In the U.S., advertisers count not only the ratings of the actual broadcast of a show, but also the first three days when shows are watched on DVRs.
Another important pattern that has emerged in the U.S. is that when two hit shows are on at the same time, many viewers watch one live and the other immediately afterwards. We will see similar behavior in Europe. 
 
TV EUROPE: And it’s good that you can show advertisers what is happening in the U.S.
ZEILER: Yes, absolutely, it’s good news. Whenever there are new developments in terms of technological or structural changes, the industry in Europe can look at what their colleagues on the U.S. networks are doing, see whether it’s working or not and then adapt their strategies to suit their own needs. [Laughs] We look respectfully to our colleagues at the U.S. networks and hope that they’ll find the right answer, so it will be easier for us.
 
TV EUROPE: In today’s economic climate, are you still keeping an eye out for acquisitions, or like so many other businesses, is it good to sit on your cash right now?
ZEILER: First of all, in difficult economic times, a good businessman should always sit a bit tighter on his cash than in times of high growth. Nevertheless, I would never rule out appropriate investments. If something comes up, we will look at it and we will go for it, if it fits our goals. Perhaps our financial requirements for closing a deal are higher now, and quite rightly so. But again, if the right target comes up, we are ready to make a move.
 
TV EUROPE: RTL’s digital channels are doing quite well. Would you like to launch more if the right opportunity came along?
ZEILER: Our concept is to build families of channels in the markets we operate in. The type of family we develop varies from country to country, depending on the distribution platforms in place. In Germany, the Netherlands and Belgium, where there is high cable penetration, a lot of free-to-air channels were already in place in the analogue era. In those countries, our operations developed families of free-to-air channels earlier than in France, for example, where there is significantly lower cable and satellite penetration. But when digital terrestrial television started in France in 2005, the M6 Group launched a new free-to-air digital channel, W9, and it’s doing fantastically well.
In a nutshell, our strategy has been to create families of channels. And in the digital world, we’re always looking for opportunities to in-crease our presence on all digital platforms. That means new digital channels, catch-up TV services, mobile TV, mobile Internet, new theme websites tying in to our brands, and so on…
 
TV EUROPE: What are your priorities for 2009?
ZEILER: First, we will focus on our core business and take great care to cultivate our relationship with advertisers. Second, we will, of course, review our cost structures. And third, we will continue to deliver what our audiences expect and appreciate—exciting and creative programs and strong brands.
 
TV EUROPE: Besides continuing to produce hit shows, what are your priorities for FremantleMedia?
ZEILER: FremantleMedia is one of very few production companies working on a worldwide basis. It’s not just about one or two good programs.
FremantleMedia has a network in place where great ideas developed and created in the company, or by third parties, can be rolled out worldwide very quickly. I’ll give you one example: Hole in the Wall is a Japanese concept which has recently sold to 32 countries and has become FremantleMedia’s fastest-selling title ever. It is the most traveled format of 2008. There are not many production companies in the world that are able to do that.
FremantleMedia’s second strength is that, unlike other production companies, such as Endemol, it can deliver two major content streams as needed: drama from daily soaps to big-event movies on the one hand, and entertainment, game and reality shows on the other.
[Another] goal is to grow the business significantly across all markets. FremantleMedia has shown very gratifying and profitable growth, and we’d like to continue this with a combination of organic growth and acquisitions. Our production arm will also be doing some experimentation in the new-media sector: online, mobile and gaming.
 
TV EUROPE: You’ve had a brilliant career. Is there anything you haven’t done yet that you would still like to do?
ZEILER: There are plenty of things I haven’t done yet that I would really like to do, but I’m not 100-percent sure I want to share these ideas with the public! [Laughs]
 
TV EUROPE: Is it fair to say your passion remains programming?
ZEILER: I feel very lucky to work in an industry that I have such a passion for. If, in the last years of my career, I were to be appointed to the job I’ve always dreamed of, i.e., program director of a network, that would really be the icing on the cake: I’ve always wanted to be a program director, but they never let me do it. They always wanted me as CEO! [Laughs]