Tuesday, November 21, 2017
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Guillaume de Posch & Bert Habets

The RTL Group is one of Europe’s leading media companies. It achieved that status by setting up or acquiring TV and radio stations in major markets, and then investing in talent and content to make those outlets compelling to viewers. As audiences fragmented, group management recognized the need to diversify the offering and came up with the family-of-channels strategy. In each market, there would be a strong general-entertainment channel, surrounded by more targeted channels. In Germany, the flagship RTL Television is flanked by VOX, N-TV, Nitro, RTL II, SUPER RTL, and the digital channels RTL Crime, Passion, RTL Living and Geo Television. Together they make up Mediengruppe RTL Deutschland, the most profitable unit of the whole RTL Group.

This formula was replicated in France, with M6 and two additional free-TV channels and five pay-TV services; in Holland, with RTL Nederland, consisting of seven channels; in Belgium, with three channels; in Hungary, with free-TV and cable channels; and in Croatia, with two free-TV channels. The RTL Group also has a stake in Atresmedia in Spain, which operates Antena 3, La Sexta, Neox and Nova. All of these stations have nonlinear extensions in the form of catch-up and other services.

As the media landscape continued to evolve, the group began investing in digital assets, from SpotX, a video ad-serving platform, to StyleHaul, a fashion-and-beauty network on YouTube. Management set a goal of generating 15 percent to 20 percent of the group’s revenues from digital in the next three to five years. In 2016, digital amounted to €670 million ($790 million) on total group revenues of €6.2 billion ($7.3 billion).

The RTL Group also owns FremantleMedia, a creator and producer of finished product and formats, including Got Talent, The X Factor, American Gods and Deutschland 83, with a network of production companies in 31 countries and a global distribution business.

In response to changing viewing habits and advances in technology, the RTL Group has been transitioning from primarily a broadcasting company to what its current co-CEOs, Guillaume de Posch and Bert Habets, call a Total Video company—producing, aggregating and monetizing video on multiple linear and nonlinear platforms. De Posch has been co-CEO since 2012, previously in partnership with Anke Schäferkordt, who in April of this year stepped down from her role as co-CEO while maintaining her position as CEO of the lucrative Mediengruppe RTL Deutschland business. Habets replaced her as co-CEO, taking responsibility for FremantleMedia and the broadcasting activities in the Netherlands, Hungary and Croatia, while de Posch oversees the operations in Germany, France and Belgium. Together, de Posch and Habets oversee the group’s digital business, group strategy, business development and several other units.

They talk to World Screen about their Total Video strategy, the strengths of the group, and the regulatory environment they need to ensure growth in an increasingly competitive media landscape.

WS: Last year, you changed the RTL Group’s mission statement.
DE POSCH: The old mission statement focused on “repeating our broadcasting success story” in every country we operate in. This gave an accurate description of RTL Group’s key mission of 10 or 15 years ago. Back then, we had a clear focus on geographic expansion in the broadcast business. But a lot has changed in a decade, especially in our industry. Five years ago, we were not invested in any multiplatform network or advertising technology. Today, digital/nonlinear businesses make up more than 13 percent of our revenue! In effect, we are transforming “the leading European entertainment network”—our former tagline—into a global leader in video production, aggregation and monetization. And this is how we’re going to write the next chapter in RTL Group’s success story.
HABETS: The new mission statement is all about capturing our new ambition and expresses our pioneering spirit. “We are innovators who shape the media world across broadcast, content and digital.” It’s ambitious, yes. But, given our rich and highly successful history, we think it’s just right.

WS: How have you been transforming the group to one that focuses on the production, aggregation and monetization of professional video content?
DE POSCH: First of all, we have redefined TV. For most people, TV today still means the physical device in their living room. But the business model of TV and the wider industry behind it has moved on, and that definition of TV is no longer valid. Thinkbox, the U.K.’s television marketing body, defines TV nowadays as “the high-quality, professionally made, predominantly long-form, audiovisual shows we watch on any screen.”

But there is a wider and even easier definition. Here at RTL Group, TV stands for “Total Video.” RTL Group is about as diverse as it gets. We offer free-TV and pay-TV channels; mainstream channels and niche channels; online video in short and long form; traditional ad sales and tech-driven programmatic online advertising. At the same time, we have one clear focus: video content.
HABETS: With FremantleMedia, we produce high-end dramas and big shows for all major free-TV channels, pay-TV channels and streaming services such as Netflix, Amazon Prime and Hulu. With our growing number of digital studios and multiplatform networks, we also produce and aggregate more and more short-form content for platforms such as YouTube and Facebook.

Maximizing the consumers’ attention to our broad variety of video offers, across all devices, is what we mean by Total Video.

WS: In 2015, you set a goal of having 10 percent of the group’s revenues come from digital. You   exceeded that goal. Which businesses drove that performance?
DE POSCH: There are three main factors. First of all, we continue to see double-digit growth rates for online video advertising revenue from our main catch-up TV ser­vices such as TV NOW in Germany and 6Play in France, which we launched almost a decade ago. In addition, the digital acquisitions we’ve done over the past four years have become revenue-growth drivers, meaning our multiplatform networks StyleHaul, Divimove and BroadbandTV and our ad-tech companies SpotX and Smartclip. Thirdly, FremantleMedia is now contributing more and more to our digital revenue as they develop and produce more and more formats for streaming platforms such as Netflix, Amazon Prime and Hulu. Just think of the worldwide distribution deal with Amazon Prime for American Gods; this was one of the key factors for the revenue growth of our content arm in the first half of this year.

WS: Why is big data important even for a media company with lots of traditional media assets?
DE POSCH: State-of-the-art technology and big data—in the form of targeting, clustering audiences or cross-device analytics—are key elements of all successful business models for the digital media world, from Google to Facebook, from Netflix to Amazon. “Data is the new oil,” as the saying goes. And, indeed, the aggregation and exploitation of data are becoming increasingly important for media companies such as RTL Group.
HABETS: Investments in technology are no longer a nice-to-have in our industry, but a must-have—both for enhancing the viewers’ usage experience and for enhancing our advertising clients’ needs. There is a lot of potential in further expanding and strengthening our data and technology-based competencies. Together with the very experienced management teams of SpotX and Smartclip, we are working on an ambitious growth plan for our ad-tech businesses. This plan includes the close collaboration between SpotX and Smartclip, rolling out their solutions across our operations and scaling up the businesses with further acquisitions and partnerships.

WS: What regulatory environment is needed to ensure the growth of European media companies?
DE POSCH: Let’s stay with our ad-tech companies SpotX and Smartclip. For both, the USPs in their relationships to publishers and advertisers are strict data protection, the fight against ad fraud and the fact that they are independent of global giants. Media regulations should not overly restrict household-level addressable or targeted advertising on linear TV in our key markets Germany and France.

Second point: to compete with the global giants I mentioned, regulation and competition authorities should give us the possibility to rethink the whole concept of European and national alliances. This becomes more urgent day by day! Just think about the fact that in 2011–12, the German cartel office prohibited all TV broadcasters in Germany from collaborating on a neutral technology platform that offered a one-stop catch-up TV service—a huge benefit for the viewers. The reason? “Big commercial-TV players cannot join forces to develop nonlinear TV because they are already strong in the TV advertising market.”

In contrast, the U.S. authorities did not see things in the same way. They greenlit an alliance between ABC, NBC and FOX—not the smallest TV groups—to launch a similar service, Hulu. Clearly, Hulu was one of the key drivers for many consumer-friendly innovations to drive and establish the growth market of on-demand services.

WS: What are the significant changes you would like to see in regulation, and why?
DE POSCH: First of all, we need more flexible rules for advertising on linear TV. We acknowledge the progress made by the European Parliament and Council to move towards this goal. But will the Audiovisual Media Services Directive ultimately be implemented as proposed? And will the directive still reflect market realities when it is implemented and transposed into national laws? It is fair to say that we have our doubts looking at the historic overregulation of our industry here in Europe.

Secondly, we need robust copyright protection and the ability to license our content territory by territory so that we can earn enough from our content to invest further and produce more content. We believe that territorial licensing is an enabler and not an obstacle for cross-border distribution of audiovisual content.

Some of the European Commission’s proposals would threaten the territoriality of copyright and contractual freedom. Even more, they could strongly restrict broadcasters in their negotiations with platform operators and therefore limit our second revenue stream, the so-called retransmission fees. We have worked very hard over the past ten years to establish this revenue stream, which is vital in order to finance programming.

WS: What is driving the positive performance of the German businesses?
DE POSCH: Above all: an outstanding management team, led by Anke Schäferkordt! Yes, it’s true, Germany is not only our biggest market, but it was also the market with the most solid economic growth over recent years. This is not enough to explain the fantastic track record of Mediengruppe RTL Deutschland. Anke and her team succeeded in further expanding our strong family of channels, establishing a second revenue stream with retransmission fees and in developing a growing digital business, from catch-up TV services to ad-tech with Smartclip.

Above all, our German management put a very clear focus on local, exclusive content some years ago. This is now hugely paying off. Just look at the series of audience hits at VOX with local shows and drama series—they have now overtaken ProSieben in terms of total audience, while our flagship channel, RTL Tele­vision, remains the uncontested commercial market leader, for a staggering 25 consecutive years and running.

WS: RTL Radio and Groupe M6 in France were recently consolidated. Why was this an important step?
DE POSCH: Convergence and consolidation continue to shape our industry, not only in North America but also across our European footprint—and in France in particular. This project is the right strategic answer in an ever more competitive market where consolidation accelerates. The combination of TV and radio will create synergies in the areas of advertising sales; attraction and retention of the best journalistic, creative and on-air talent in France; and investments in digital technology. This model already exists very successfully at RTL Belgium.

WS: What drives the creativity of the Dutch market, and what is RTL Group’s position there?
HABETS: History has shown that the TV business is very innovative in the Netherlands. The triumphant advance of formats such as Big Brother or The Voice are just two examples. There are entire genres that grew from everyday topics into big trends in Holland, like cooking or do-it-yourself shows. By the same token, many producers pick the Netherlands to test new formats. Perhaps it’s the cultural diversity of the Netherlands, combined with the people’s openness and appetite for innovation that puts us one step ahead here at times. In any case, it’s a great environment for TV-making.

Over the past ten years, we have transformed RTL Nederland from a traditional broadcaster into an all-round media and entertainment company. First of all, we have significantly strengthened our major free-TV channels and launched four new thematic channels. This makes us the clear market leader in linear TV. We have also moved into other commercial areas, such as RTL Ventures and RTL Live Entertainment.

At the same time, we have massively expanded our digital businesses. We were the first RTL broadcaster to launch a joint venture with SpotX for programmatic ad sales and launched our own short-form network, RTL MCN. And with Video­land, we acquired a local on-demand platform and transformed it into our own subscription-based streaming service. This is particularly important as Netflix has gained crucial scale in the Netherlands. I am convinced that the experiences we are making with Videoland in the Netherlands are highly important for the whole RTL Group.

WS: What opportunities do you see in the channel business? Are you looking to increase catch-up or SVOD services?
HABETS: Actually, we’ve decided not to have this traditional distinction between the channel business and the streaming services anymore—that’s what Total Video is about.

In order to remain a global leader, we have to build what I would call a bridge between these two sides of our business. Consumers no longer care where they watch our content; they don’t make the distinction between linear and nonlinear anymore. They just want to watch the latest episode of their favorite TV show. So why should we still draw strict lines between linear and nonlinear, offline and online? It is the consumers’ perspective that should guide all our offers and decisions. Again: we are in the game of maximizing the viewers’ attention to our video services.

In other words, we have stopped seeing nonlinear as an add-on to our established linear-TV channels. Today, 80 percent to 90 percent of our free cash flow is generated by our strong families of linear TV channels. However, there is no time for us to rest on our laurels, because growth in our industry mainly comes from nonlinear, whether it’s growth in usage or revenue, both from advertising-funded and paid services.

In the area of content production, particularly in the drama genre, the major streaming platforms need exclusive high-end productions. All of them are massively stacking up their content budgets.

So our answer is: let’s go for Total Video at full throttle, building this bridge between our TV and digital activities, with an integrated, 360-degree approach. From content creation and production to distribution and monetization.

WS: Are you looking to make any acquisitions?
HABETS: The shift from television to Total Video presents us with many new opportunities, but it also means we must set clear priorities. Therefore, we have set two main investment goals for acquisitions and partnerships. The first is to further develop in the digital domain, namely in ad-tech and streaming services. The second is to produce our content and own the rights to it, because we’re certain this will be key to further growth.

WS: What does FremantleMedia need in order to remain ahead of the competition and relevant to broadcasters and platforms worldwide?
HABETS: We want to further grow FremantleMedia, both organically and via targeted acquisitions. We focus on creative talent, developing projects that will feed into FremantleMedia’s unrivaled international network. Compared to bigger acquisitions, this is a long-term play, as development takes time. But we are convinced that this is the right strategy for us.

We are delighted about the creative and financial performance of FremantleMedia—from the success of the high-end drama series American Gods to the renewal of American Idol on ABC and a very promising pipeline of new drama series such as Hard Sun, The Rain, Deutschland 86 and the second season of Modus. Cecile Frot-Coutaz and the management team at FremantleMedia have done a fantastic job. FremantleMedia is always going to be more of a “niche player,” as Cecile has recently put it, but we are excited about the huge progress in the scripted areas.

WS: What are the RTL radio and TV stations doing to serve their audiences in these difficult times?
DE POSCH: We are aware of the great responsibility that comes with being an opinion former and information provider in society. I would even say that we, as a pan-European commercial broadcasting group, have a special responsibility, for several reasons: Our main channels target the general public, including people with little or no interest in politics. We are truly independent of any party or political movement. And, above all, we are not in the business of lecturing our viewers and listeners. We take their concerns very seriously. “Always close to the audience” is and will remain one of our key missions at RTL Group. That is what makes our news bulletins most popular among young viewers.

We will continue to embrace this responsibility by investing significant sums of money in fair, impartial, independent journalism; by not making any topic taboo; and by presenting controversial topics in such a way that we explain the consequences for people’s everyday lives, in a language they understand.

One of the key learnings of the past years has to be: don’t leave the news to the algorithms of the social networks. Let us all get out of our filter bubbles and echo chambers!

WS: What are the best ways of sharing information and best practices across a decentralized company such as RTL Group?
DE POSCH: In our industry, I see a lot of global developments that call for a central answer at the group level. A decentralized structure is the logical thing to do from a consumer’s perspective as far as language and local content are concerned. But from a strategic point of view, we need to examine which actions need to be driven by the group—just think about developing integrated ad-tech platforms across the group or about growing our market position in nonlinear.
HABETS: In a nutshell, we are going back to our roots and reinvigorating our pioneering spirit: from a “holding” company to a very proactive, dynamic company that invests, takes risks and shakes things up.



About Anna Carugati

Anna Carugati is the group editorial director of World Screen.

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