Aat Schouwenaar

April 2008

With production facilities in more than 20 countries on five continents, Endemol has become a leading producer of entertainment formats that can cross borders and captivate audiences. In fact, Big Brother, Fear Factor, Extreme Makeover: Home Edition and Deal or No Deal are just some of the shows that have become household names for millions of viewers around the world. Endemol has a library of 1,200 non-scripted formats and more than 150 scripted titles, and has come up with an average of 100-plus new formats each year. Keeping the creativity flowing, while eyeing the bottom line, is a top priority for Aat Schouwenaar, Endemol’s chairman of the management board and CEO. He talks to TV Formats about his company’s success.

TV FORMATS: Endemol has three main lines of business: non-scripted, scripted and digital media. What are your priorities for each?

SCHOUWENAAR: In non-scripted, it’s all about generating ideas that work across a wide range of media platforms, not just TV, and creating formats that are easily adapted for local markets around the world. So basically, the plan for non-scripted is to continue as we are. It represents about 75 percent of our worldwide business and is therefore extremely important to us.

Scripted is more difficult. We generate about 12 to 13 percent of our turnover in scripted worldwide, so clearly non-scripted is six times bigger. However, we’re hoping to further grow this part of the business and do so organically, because we already produce scripted programs in a number of countries. But in the territories where we don’t, we might consider acquisitions.

Digital media is one of our key opportunities for growth—particularly digital video. It started slowly, but we have been working hard at it and now we are really seeing it working out and becoming an entity.

TV FORMATS: What are the most important production territories for Endemol?

SCHOUWENAAR: For us everything started from the Netherlands, so it’s the Netherlands, Germany, the U.K., France, Spain and Italy—so the six main European territories and the U.S. These territories make up 70 to 80 percent of our business as a whole. Latin America is increasingly important, starting with Argentina, and then spreading Spanish-language programs throughout Latin America. We’re also increasingly focused on Russia, on India—where we already have rapidly growing companies—as well as looking at new territories such as Korea. The smaller European countries are also very important to us, of course. But the big ones are the seven that I mentioned to begin with—the major European countries and the U.S.

TV FORMATS: Would you agree that there’s something about the Dutch market that is more open to trying new ideas than some of the other territories?

SCHOUWENAAR: Yes. Well, that at least has been our experience over the last 15 years. When you launch programs in the Netherlands and they are successful, most of the time they are worth a lot as exports to other territories. So the Dutch market is sort of a test market.

TV FORMATS: Argentina is similar; a lot of good formats have come out of there as well.

SCHOUWENAAR: Yes. We have a very substantial operation in Argentina. They are also very creative. Very often it’s not about big budgets. It’s more about big ideas—even at low budgets—because we can aim for bigger budgets in the bigger territories afterwards.

TV FORMATS: And possibly a great show at a lower budget can fit more broadcasters’ needs and different time slots, because not everyone is looking for a prime-time show.

SCHOUWENAAR: Yes. In the Dutch market Endemol learned to produce at low costs, because the budgets are not big here. It’s easier to boost a small budget to a bigger show than the other way around.

TV FORMATS: Much of Endemol’s success has been due to its ability to manage the creative process. How do you encourage your teams to come up with the best ideas?

SCHOUWENAAR: First of all, the local operating companies create, attract and [provide an incentive to] their own talent. They are very much autonomous. Secondly, we have an international network. We have general creative meetings every two months and we use our network to identify what’s happening around the world. Twice a year we hold a creative exchange, where people can pitch their own formats to the other creatives in the group. We hold a lot of international meetings and get together in order to stimulate creativity.

TV FORMATS: Are there production know-how and best practices that the subsidiaries share?

SCHOUWENAAR: Yes. One of the best examples of that is the Big Brother exchange, which we hold twice a year, where everybody shares with each other what they do in their own specific countries. For instance—what are the new ideas and twists; what can we do a little bit differently on Big Brother so that number nine and number ten are just as successful as number one and number two.

TV FORMATS: It’s amazing how long Big Brother has lasted.

SCHOUWENAAR: Yes, and it’s still going on. In the U.S. we’re doing series nine now. Series ten will be on air in the summer. Spain is making series ten this year. Italy, Germany and Brazil are all on series eight. In fact, it’s coming back in nearly all its major territories this year. Yes, it goes on and on and on!

TV FORMATS: What is Endemol doing about piracy—both the piracy that takes place online and also broadcasters who steal your ideas? Are you starting to get around either one?

SCHOUWENAAR: You never get around it completely, but we do fight it wherever we see it happening. We are very aggressive on this at the moment, even on the Internet, where it’s especially difficult. But in the TV world, when we see broadcasters and competitors walking away with our ideas we immediately go after them—it’s the only option we have.

TV FORMATS: Part of the problem is the difficulty of copywriting a format.

SCHOUWENAAR: Well, I think that once you have a fairly well-defined program—when you have it on tape and you have all the scripts—it becomes much easier to protect. What’s difficult is when it’s just an idea on a piece of paper—then it’s almost impossible to protect, because there is always a possible twist on it. If [the show] is well documented, it’s far easier to fight piracy, and increasingly the courts are tending to agree with us. But the laws are still not the same everywhere. We all know it’s not easy to protect IP in countries like China, for instance. But even in some of the Western European territories it’s difficult, and the laws still differ from country to country.

TV FORMATS: Of course, one way to get around piracy is, once you have a good idea, get it on the air as quickly as you can.

SCHOUWENAAR: That’s right, as quickly as possible. If you have the tapes and particularly if it’s a success, then the bigger broadcasters tend to respect that kind of intellectual property, especially in the main territories.

TV FORMATS: And this is why the type of production expertise that Endemol has is so valuable.

SCHOUWENAAR: Yes, that’s also a protection in itself. We have a powerful organization with great production expertise and a big, well-documented library. So hopefully people think twice before they start copying our intellectual property, because they know we are aggressive and strong in this area.

TV FORMATS: In what areas do you see the most growth happening in the next 12 to 18 months?

SCHOUWENAAR: Digital and scripted programming. We are also increasingly looking at the so-called advertiser-related market, where we see significant growth opportunities—particularly in the U.K. and the U.S. Currently we do almost $200 million to $250 million in turnover in the U.S. It’s a big, big, big market and there are still opportunities there.

TV FORMATS: You mentioned relationships with advertisers. The E.U. has lifted some of its restrictions on product placement. Do you think this will be a good thing for Endemol?

SCHOUWENAAR: Definitely, yes. It’s part of E.U. law now, but the member countries still have to ratify the directive.

TV FORMATS: Are you looking to make acquisitions?

SCHOUWENAAR: Yes. We’ll be looking at talent and production companies—both in digital media and traditional TV.

TV FORMATS: You have production subsidiaries in more than 20 countries. So, that number could grow?

SCHOUWENAAR: That could grow. In fact, it should grow.

TV FORMATS: Is there a magic figure you have in mind?

SCHOUWENAAR: I sat in a media conference two or three months ago in the U.K. and stated that our aim is to double our EBIDTA numbers toward 2012, which is an aggressive growth model, but we think it’s achievable.

TV FORMATS: What brought you back to Endemol, and what do you enjoy about leading the company?

SCHOUWENAAR: Well, they asked me, so that was my main reason for coming back! But as I said last summer, it will only be for a limited period of time. And what do I enjoy? Well, this is a very lively company with a lot of challenges for the coming years. Also, our shareholders are now making money available for acquisitions and there is a very strong focus on growth. I just enjoy being back.