Tele München Group’s Herbert Kloiber

When Herbert Kloiber founded Tele München Group (TMG), he envisioned a company that would service German-language territories with high-end films, TV fare and classical music programming. He soon set his sights beyond Germany’s borders, selling content, forging partnerships and participating in international co-productions. In response to European broadcasters’ demand for homegrown product, Kloiber is shifting a significant portion of TMG’s investments from rights trading to production.

WS: What factors have contributed to the increase in the volume of European drama?
KLOIBER: First of all, a lot of U.S. content has moved far away from the tastes of European TV audiences, and the Hollywood studios can no longer just sign an output deal with one or another partner and have all their product on the air. So, in Europe, a lot of money has shifted toward production. For three decades, Beta Film and TMG have been at the heart of trying to make things work between the U.K., France, Italy and Germany and sometimes the U.S. In several instances, that has worked well, provided the TV movie or miniseries was shot in English and used fairly prominent English writers and directors and incorporated transatlantic tastes into the European concepts and subject matter. Now, 90 percent of the drama that works here is domestic. It’s no longer shot in English. As a consequence, we recently acquired one of the big production companies in Germany, Odeon Film, which provides many hours of drama, cop and detective shows. It is a public company in which we took an interest six years ago and recently made a takeover bid, and now we are the 85.23-percent majority owner. That should be a solid step in expanding the number of hours and volume of our produced programming as opposed to our licensed and traded product.

WS: How do you decide what to invest in as the media business changes so rapidly?
KLOIBER: We keep a very close eye on the businesses we’ve set up and nurtured and obviously when we feel that the wheels are starting to come off, as we do with the physical home-video business, we very much go to the forefront of development of on-demand platforms and channels and EST [electronic sell-through]. Also, with my son, Herbert Jr., who’s been here for five years, I have divided how we look into the future, and we invested in more productions and development as opposed to acquisitions that have limited rights possibilities. We invest about $150 million a year in U.S. acquisitions, so with the exchange rate with the U.S. dollar being an uncertainty for the next number of years, we’d like to see more of the $150 million going into European production, mainly German. We will continue with our broadcast interests in RTL II and TELE 5. I have disposed of our two-channel broadcast operation in Austria. Our $250-million business worth of licensing and reselling product has matured. We feel that those margins will be eroding in the future as the German networks are using less and less U.S. product in reasonable time slots. The only shows of the last few years that came from the U.S. networks or majors were Two and a Half Men and The Big Bang Theory, on which ProSieben depends basically eight hours a day. But none of the shows from Fox or Paramount or Warner Bros. or any of the other studios play in prominent time slots. All the small channels that the RTL Group and ProSiebenSat.1 have created, which reach 1.5- or 2-percent audience share, are the ones that are currently using Hollywood studio product.

WS: What are the biggest challenges facing the major German broadcasters?
KLOIBER: Major broadcasters are shifting a lot of focus to their news and sports operations where they are still very dominant, although, the rights to the Olympics from 2018 until 2024 have gone to Discovery Communications. Everybody said they will still cut a deal with ARD and ZDF to split the rights. But the negotiations collapsed and therefore the Olympics will most probably not air on the public networks where they have been forever and ever. Still, programming investments will continue to flow toward events that will garner 6, 8, 10 million viewers and much less into acquisitions.

WS: What growth opportunities do you see for TMG in the next 12 to 24 months?
KLOIBER: The integration of our production business into the whole company is important so that we get more writers and directors and people who bring in ideas to fuel both our theatrical and television distribution. That’s mainly where our growth lies, other than the performance of some of our subsidiaries, like RTL II, which had a great 2016, and TELE 5, whose 2016 was better than ever. But we’ve had a fluctuation in our theatrical business, which comes from if you’ve got The Twilight Saga you’re doing well, but with Divergent you’re not doing so well on a huge investment per acquisition. We’re trying to mitigate that by making four or five German pictures for which we retain worldwide rights. This provides us with a better margin and a better profit share. It also allows us to control all the on-demand rights and all the pay windows. So that’s where the growth is, becoming more independent from acquired product and redirecting a good part of our investment into production and making our rights chain longer and less cumbersome. We are also looking to continue to invest in busi­nesses where we can leverage our core strengths in the German-speaking market, where we reach young audiences directly, or where we participate in the international expansion of proven business models.