Guillaume de Posch

April 2008

ProSiebenSat.1 Media was already a powerhouse in Germany with its four stations, Sat.1, ProSieben, kabel eins and N24, even before it bought the SBS Broadcasting Group last year. With this acquisition, however, it has become a leading pan-European media company with 26 commercial TV stations, 24 premium pay-TV channels and 22 radio networks in 13 countries across Europe. Like all advertising-supported broadcast groups, ProSiebenSat.1, whose majority shareholders are the investment groups KKR and Permira, must confront the challenges and opportunities the Internet offers. CEO Guillaume de Posch has made diversifying the group’s offerings and revenues a top priority. The group operates Germany’s largest online video-on-demand portal, maxdome, as well as the German call-in channel 9Live. It also runs the leading premium pay-TV channel operator C More in the Nordic region, and holds a stake in the Internet services MyVideo and lokalisten.de.

An equally important priority for de Posch is ensuring that the group and all its stations are creating compelling content that will first attract target TV demographics, but will also find additional lives on various other platforms. ProSiebenSat.1’s stations have had considerable success creating programming formats that will work across various countries. The ProSieben game show Beat Your Host! has sold to numerous markets, including the U.K. with ITV. The improv-comedy show Schiller Street and the “edutainment” series Clever! have also traveled well. Most recently, a version of the ProSieben talent show The Successor, with Uri Geller, aired on NBC in the U.S. The SBS stations also have an impressive track record of adapting formats. In fact, the precursor to the U.S. hit Survivor was Expedition: Robinson, a show successfully produced by SBS stations.

Born in Belgium, de Posch began his career at Tractebel, the international energy-and-services conglomerate, where he eventually headed the Far East operations and was based in Hong Kong. He then worked for McKinsey & Company before joining CLT, Compagnie Luxembourgeoise Telediffusion, now called the RTL Group. He was then deputy general manager and programming director for the French pay-TV company TPS, before joining ProSiebenSat.1 in 2003 and becoming CEO in June 2004.

De Posch talks to World Screen about his vision for ProSiebenSat.1 and his willingness to embrace the opportunities offered by the digital world.

WS: As you integrate SBS into the rest of the company, what are your priorities?

DE POSCH: We have three of them: the first one is to make sure that our core business—free TV—develops well. Our core competence is content, and we are really focused on that. We have to make sure that with the new size of the company we can create better and more innovative programming for the entire footprint. The second priority relates to new media, what we call in our jargon diversification, where we need to make sure we create new sources of revenue for the group and also increase our online presence. And the third priority is to make sure that our technical infrastructure is properly structured to face new challenges in the years to come.

WS: Are you finding that there is a big difference in corporate cultures between ProSiebenSat.1 and SBS group? And is the integration going well?

DE POSCH: It is going very well. We have given ourselves 18 months to integrate the group, and we are now halfway down the road. I can tell you that every week we are getting better at getting information flowing through the group, exchanging ideas, and rolling out programs and product from one country to another. So I think we are on a good path.

As far as the cultures are concerned, I would say they were similar, with probably one major difference. Overall, SBS has been operating in a more decentralized way than we used to do in Germany. But this simply has to do with the fact that SBS was multi-country, whereas in Germany, by definition the ProSiebenSat.1 group was mono-country. We are early in the process of trying to make sure that many of the resources are shared, like production, programming, acquisitions and so on.

WS: You mentioned content. Your group produces quite a bit of it.

DE POSCH: Yes, the entire group spends around €1.6 billion in content and thereof around 60 percent [consists of] our own productions. We believe that by having 26 free-to-air outlets in 13 countries we are in the unique position to create our programming content and roll it out from one country to another. There is a very fresh example, which I am really proud of. It’s the program called The Successor, with Uri Geller as host. We launched the format in Germany. We started the back-to-back production of that format for the Dutch station SBS 6 in January in the same studio and in March on the Hungarian station TV 2. We try to maximize our internal production resources and know-how to make this happen. This is one example for one show; we will try to replicate that example in other shows.

WS: Obviously you have economies of scale once you get the right format, because you can use it across many stations.

DE POSCH: Exactly. If you look at the success of The Successor or Are You Smarter Than a 5th Grader?, you see that formats can circulate much more quickly than they did five or ten years ago. Another example is our famous soap Verliebt in Berlin, based on Betty la fea. It was a major success in Germany, and the German version is now running very successfully in access prime time on TF1 in France. This would not have been conceivable ten years ago, but now there is an appetite for cross-country formats, and that is what we need to take advantage of.

WS: You mentioned new media. Many of your formats can find a home on broadband or even on mobile.

DE POSCH: Yes, just to give the example of The Successor and Uri Geller, we are generating a substantial amount of viewer calls in every [episode] and we have many MMSs around the show that are circulated. We are also putting footage of the show on our German YouTube, called MyVideo. We feature specials on ProSieben.de. A multichannel and multiusage of content is exactly what we are trying to optimize and maximize. In Germany, we have been at the forefront of this multimedia exploitation also because we have two strong vehicles to do that. The first one is called maxdome. It’s the largest VOD portal in Germany, that we run together with United Internet, which is a major ISP in the German market. The second one is MyVideo, where every day now about 8.5 million videos are downloaded by our viewers.

WS: Will you be rolling out maxdome in markets outside Germany?

DE POSCH: Yes, we’ll definitely do so, but we will first take MyVideo out in other territories. At the end of January we launched it in Holland and Belgium. They each have their local versions. In the second step, maxdome is obviously a candidate for rollout.

WS: In what other areas are you expanding?

DE POSCH: We rolled out additional free-to-air channels. There are three of them worth mentioning. The first one, Kanal 9, was launched in Sweden. The second, FEM, was launched in September of last year in Norway. And we’ve just launched PULS 4 in Austria. So we will continue growing our fleet of channels.

WS: Some people say broadcasting is a dinosaur business because advertising is not doing well as viewers are moving away from
television. Would you hold the opposite view, that broadcasting is a good business to be in?

DE POSCH: I think it’s a very good business to be in, because TV will always stay the most important medium for the people, but we also have to prepare for the future in a very proactive manner. In Europe, we have been leading the pack in developing our online activities. To give you one number, if you take Germany, which is the largest market in Europe, our online activities are ranked number three among the competition. So we are clearly well positioned as a broadcaster within the online business. We’ve got 16 million users on a monthly basis in Germany, and that is a real sizable number, which makes us compete head-to-head with the big ISPs like T-Online or the others. We want to be part of that game, so “dinosaur” is definitely not the right word to define us!

WS: Does the size of your group and the number of stations you own give you better leverage when negotiating with the Hollywood studios?

DE POSCH: Not particularly, because Hollywood has been very skillful at selling on a territory-by-territory basis. This being said, we believe we can be quicker at rolling out best practices in rights exploitation from territory to territory. We can also compare notes on new rights like VOD, so to speak, so it makes us more efficient. But let’s face it, a Disney or a CBS Paramount or a Warner Bros. or a Sony or an NBC Universal are big partners to deal with.

WS: KKR and Permira are among the new owners of ProSiebenSat.1. Private-equity firms generally want to see higher profit margins in the companies they buy. What increases in profit margins and what growth areas do you foresee in your various divisions?

DE POSCH: Overall for the group we have margin-level ambitions of over 25 percent. In 2005, we were at 21 percent, a year later at 23 percent. We are on a very good path to be at 25-plus percent, bearing in mind, of course, that part of the solution resides in the higher-growth businesses that we need to develop, but also that the free-to-air advertising market overall must develop well, and there we have contrasting views from market to market. Recently I was in Bucharest, where the advertising market is growing by double digits, whereas in Germany it’s low single digits. That’s why I believe that the SBS acquisition was the right strategic step for the group. If you sum up all the former SBS countries, you have growth in strong single digits, whereas Germany has traditionally been low single digits.

WS: What are the forecasts for the advertising market in Germany?

DE POSCH: It really ties in to what the general economy will be in 2008. If one believes the forecasters, they predict something like a 1-percent plus for the TV-advertising market.

WS: What response do you have to critics who say that a great emphasis on profit margins might limit new investments or acquisitions you might want to make in the future? Is that an issue for you?

DE POSCH: I think it’s more of a challenge than an issue, because it forces us to permanently reinvent ourselves in terms of where we put our money and resources. We are evaluating if we cooperate with a strong external partner for our production and I.T. facilities, Pro-
SiebenSat.1 Production, a) because we believe we need scale to compete in the I.T. arena for our core business, but also, b) we believe that teaming up with other players might render us more efficient. So we need to improve productivity. In this respect we are no different from any other business. What is important is to make sure that enough resources are committed to programming, which is at the heart of our business, and I can tell you that our programming expenditure will increase in 2008 compared to 2007.

WS: From what I have read, you have always been very bottom-line-oriented and results-oriented. But have you had to make some adjustments in the way you think now that you deal much more with creative people and producers, who perhaps don’t always have the bottom line top of mind when they are in the creative process?

DE POSCH: Basically, to make TV you always need a unique combination of people who are more creative and people who are more business-oriented. The one doesn’t work without the other. You can’t just have creative people, nor can you have only businesspeople, and my job is to make sure that within the group at every level, we always try to have that balance between creativity and the reality of the business.

I personally am involved with many producers, either German ones or international ones, simply because, at the end of the day, it’s the next big idea that moves things. And don’t make any mistake about it: I am very much into the creative part, too. If I take one example, which is The Successor, I personally contributed to getting Uri Geller to work for the group. He’s a great guy, by the way.

WS: The Successor aired in the U.S. as well.

DE POSCH: Yes, we followed that very closely; we even sent a team to NBC to check it, but let’s say we believe that NBC did a couple of things that we didn’t like here for the German market. The Successor in Germany got a 20-percent share, whereas NBC did a 10-percent share, so we did something maybe better than NBC.

WS: What is more exciting and even more challenging about being in television today than it was when you started at CLT in the early 1990s?

DE POSCH: It’s the Internet and streaming, not only in television but everywhere. We need to be very proactive to be positioned in that new world of that so-called networked-information economy. That’s why we need to be clever. When I was at CLT in the early ’90s, the Internet didn’t really exist, believe it or not.

WS: What are the most important things you want the group to achieve this year?

DE POSCH: We need to make sure that our ratings are on top—that’s priority number one. Priority number two is that we execute our synergies. And priority number three is to make sure we further build up our online and diversification activities—this is really important for the long-term future of the group.

WS: What do you enjoy most about your job?

DE POSCH: I am involved in many areas, from studio deals to new programming and new ideas. I’ll tell you what I really like is to be on the ground and make things happen. I like everything that involves creating new things.