Exclusive Interview: Turner International’s Gerhard Zeiler

PREMIUM: Gerhard Zeiler, the president of Turner Broadcasting System (TBS) International, talks to World Screen about keeping costs in check, but never sacrificing a channel’s most valuable asset—its must-watch shows.

WS: After 13 years at the RTL Group, what appealed to you about the offer to work at Turner Broadcasting?
ZEILER: First of all, I am a strong believer in change. After 13 years at the RTL Group, where I was CEO for nine years, I was thinking that it was time to once more do something new. The second reason was that Turner is even more international than the RTL Group. And third, it was always a dream of mine to work for a big American media company.

WS: At RTL you had a European broadcasting business and a global content business, FremantleMedia.
ZEILER: Yes, and here I am responsible for all the Turner channels outside the U.S. and Canada. Asia is a new experience for me, as is Latin America.

WS: In the months that you’ve spent evaluating the Turner operations, what have you found to be its main strengths?
ZEILER: One of the main strengths is the powerful global brands, whether it’s CNN International, Cartoon Network or TNT. Especially in a world that is increasingly fragmented, having strong brands is a great advantage. Another strength is the size and success of our Latin American operation. Turner invested at the right time, and today it’s a huge business with a substantial growth perspective. Turner therefore is positioned to harness a robust upside in the region. That includes Brazil, the world’s most dynamic pay-TV market that’s adding hundreds of thousands of new customers every month to the current 16 million customers—which is just 27-percent penetration—and is forecast to add another 10 million households by 2017.

WS: For years at the RTL Group you oversaw stations that were predominantly financed by advertising. Now you have a bouquet of channels that have a dual revenue stream. Is pay TV better positioned to face the economic ups and downs in a continually fragmenting world?
ZEILER: The less dependent you are on one revenue stream, the better. And I strongly believe that in the future, a TV company that is not a satellite platform or a cable operator should be invested in content, in pay TV, and also in free to air. If you own significant rights, and make both subscription and advertising money, you have the right mix to balance any volatility in the markets.

WS: Are you looking to add channels or stations to the Turner portfolio?
ZEILER: One of the reasons I wanted this job is that at Turner there is one clear objective set by the shareholders, and that is growth. We will grow organically, for sure. But we also will grow by acquisitions. If we want to grow internationally, we have to do both: launch new products, new channels, new brands, but also acquire. That is what we will do, but as you can imagine I cannot speculate right now about what we will do in the future.

WS: But you will tell me first when the time comes!
ZEILER: Yes, of course!

WS: You oversee a portfolio of international brands, including CNN, Cartoon, TNT and Turner Classic Movies. How important is it to make these brands feel local, both from a content point of view and from management point of view.
ZEILER: I’ve always had a strong conviction that our industry is a local industry. Yes, you have a lot of global products, programs and brands, but most of the success factors are local ones. Whether it’s how we develop the brands, how we market the programs, how we schedule—all of these measures have strong local success-factors. And that’s the reason why I have this saying: You have to be British in the U.K., French in France, Brazilian in Brazil and Indian in India. So the local aspect is really important. It is not only true for free to air—there it is obvious—it’s also true for pay TV. The stronger the pay-TV industry becomes, the more local you have to go. We at Turner will invest more in local productions to increase the local relevance. That is also one of the main principles that guided us during our restructuring process in Europe, to decentralize and give more responsibility, more decision-making power, to the local markets.

WS: The figure that was reported in the press, the 30-percent reduction in staff across Turner EMEA. Will that be done over time?
ZEILER: The 30-percent reduction in positions will take place in two stages: the first stage is a restructuring process, which is taking place in the first months of this year. The second stage is the outsourcing of certain functions, which will be implemented over time.

WS: We live in a world where viewers don’t only watch television. They watch the content but they watch it on whatever screen they prefer. What are the challenges and opportunities of making Turner’s brands relevant on all screens?
ZEILER: There are huge opportunities because the more comfortable, the more convenient it is for consumers to watch our channels and our programs, the more eyeballs, attention and success we will have, the more buzz we create, the more advertising revenues we will get. These are huge opportunities. Yes, it’s a complex process because we have to go forward together with our partners, the platforms. But that is not all we need: There must also be a superior technological solution. And contrary to the U.S., internationally we face the complexity of different languages. But we share the same goals: to be on as many devices and on as many platforms as possible; to be where the consumer wants us with our brands and with our channels. We need to secure rights, we must provide consumer-orientated technological solutions and we will get the right marketing.

WS: As you see it now, is nonlinear viewing—online, on tablets and other devices—incremental to linear channel viewing?
ZEILER: The big fear of the industry, let’s say five years ago, was that nonlinear viewing would detract from linear so it would only cannibalize viewing taking place on the channels. Looking at the facts today, we see now that this is not the case. Nonlinear is mostly incremental, but of course not only. What we see today is that more and more people watch our branded programs on devices that are not being measured and therefore we have to get the ratings measurement system right.

WS: That must be complicated because there are different research companies in different countries.
ZEILER: It is very complicated, but it is mostly a technological process and I am therefore optimistic that it will be sorted out.

WS: With all this viewing being done online and on multiple devices, do you believe that linear channels will remain relevant?
ZEILER: Oh of course, 100 percent. The huge majority of viewing is still on linear channels. It will remain so also in the future, as long as these channels really come up with programs people want to watch live. All kinds of programs that have the characteristics of a live event, you don’t want to watch them the day after your friends watched them. On the fiction side it’s a little bit different, but still, if you have a must-see program, people want to watch it as soon as possible.

WS: Tell us about CNN International. Unlike CNN in the U.S., which has been struggling in the ratings, CNN International is well respected by government and business leaders.
ZEILER: CNN International is the strongest international news brand that exists. We find this in every single survey that we’ve done. I have not met anyone who doesn’t know CNN. What is this brand about? Three qualities: First it’s about news, if you really want to know something, it’s on CNN. Second, it’s about trustworthiness and independence. CNN International is neither right wing, nor left wing, it’s not pro government or against government. Viewers trust CNN because it’s impartial. The third thing is, if something really important happens, that’s where you go. It’s great to have this brand in the family. Sometimes it’s not always very easy to fulfill the promises but as you will see whenever something happens, whether it was Fukushima or the Arab Spring or Hurricane Sandy, people turn to CNN.

WS: And how about Cartoon Network. The children’s market is competitive most everywhere. But Cartoon Network has carved out a niche for itself; it has a voice now.
ZEILER: Yes, it has a voice. It is very clearly positioned and it is more about boys. Boys love us almost everywhere in the world. Additionally, Turner developed a few local kids’ brands, like Pogo in India. And we also started free-to-air channels, like Boing, a joint venture with Mediaset in Italy and in Spain. And last but not least don’t forget Boomerang and Cartoonito. The first one is a more family-oriented channel, with the second being the younger brother of Cartoon Network.

WS: You lived through and survived the annus horribilis 2009! Did you learn any lessons during that difficult year that you can now apply to the TBS International portfolio of channels?
ZEILER: There are a few lessons. When a crisis like the one in 2009 hits, you really have to look at what is necessary and what is not. That leads you to analyze your organization, your structure and the core factors of your success. And you take out whatever is not absolutely necessary. Beyond these priorities, you have to keep in mind in a crisis that it is not all about savings. You also need to improve efficiency, erase duplication and reduce internal bureaucracy. There is a phrase that applies to all this: Don’t waste a good crisis to improve your business. And last, but not least, the third lesson is: Don’t lose your competitive position in a crisis. Yes, you have to reduce costs, but don’t underinvest compared to your competition. Hold on to your competitive position and if possible even increase it. These are the three lessons I learned in 2009. And that is how I think you adapt in a crisis.

WS: I know each market is different, but is the situation in Europe today as grim as it was in 2009?
ZEILER: It’s not like that, but Western Europe is a region where there is not a lot of growth and that also has an impact on the pay-TV industry. You don’t find a lot of markets in Europe, where pay-TV penetration is growing significantly. In some countries, pay-TV is even losing subscribers due to the poor market conditions, especially in Southern Europe. Additionally, 2012 was also a hard year for all players regarding the advertising side of the business. While the situation is definitely not as bad as 2009, it’s not great either.

WS: Can social-media sites be friends of linear channels, or are they foes?
ZEILER: They can be friends, and they are. It’s a fantastic marketing tool. The only thing I would say is, they have to respect copyright laws.

WS: Is piracy still a big issue?
ZEILER: It’s an issue for the whole creative industry and we should not give up on really doing everything we can in order to prevent it. And there are several things we can do: offer our brands and content on as many devices as possible and have services, which are comfortable to handle—to name only two. But we also have to remind our partners to comply with the law.