Turner International’s Gerhard Zeiler

PREMIUM: Gerhard Zeiler, the president of Turner International, tells World Screen that he believes must-have brands and must-see programming offered to consumers in a variety of ways will ensure the ongoing health of the channels business.

WS: Turner International had growth in revenues and profitability in 2015. What has been driving these increases?
ZEILER: Indeed, we had a really good 2015, with a double-digit revenue increase and a huge jump in profitability in constant currency terms. The good news is that it was not only in Latin America, though that is our best-performing region; growth was also very strong in Asia, especially in India, and also all across Europe. Europe turned around amazingly in several markets and as a whole. Southern Europe in particular rebounded, with France, Italy, and especially Spain together contributing to very positive results.

I believe there are four pillars to our success. Firstly, strategy: our global two-kids-brand strategy [Cartoon Network and Boomerang] shows good results already. We have scaled up our entertainment programs. And we are putting greater focus on new markets, licensing and merchandising, digital and content production. Secondly, efficiency: we have reduced red tape and streamlined the organization, and it has paid off in better working processes for many. Thirdly, alignment: co-operation has increased significantly within the various strands of our company, and we have stronger relations at all levels. Last, but not least: our people. Together with my fellow presidents I try to make sure everyone at Turner feels empowered. Everyone has responsibilities and everyone counts.

WS: How have you been expanding your business?
ZEILER: Consumer products, the licensing and merchandising business, has always been good for Turner, but was dependent on one brand, one franchise, Ben 10. Today we offer a much broader portfolio. We have Adventure Time, which is successful all over the world. We have The Amazing World of Gumball. We are bringing back The Powerpuff Girls right now. We are resurrecting Ben 10 and we have We Bare Bears. These five franchises alone are huge assets and we want to at least triple our consumer-products revenues in the next three years. But that’s only one part. The second part is what we call location-based entertainment. We have a Cartoon Network water park in Thailand, which has all the Cartoon Network IP there, and a Cartoon Network hotel is now being built in the same location. Soon a theme park will be opened in Dubai where Cartoon Network will also play a huge role. We also have projects in Malaysia, in China and in Southeast Asia. I’m really excited about location-based entertainment. Our imagination has no limits—in Asia for example, you can travel in Cartoon Network-branded trains and airplanes. Finally, and maybe coming as a surprise to some, gaming is gaining momentum in our portfolio. In 2015, in Asia alone, we launched 69 digital games on websites and mobile phones and 40 in Latin America.

WS: Not only are you growing your portfolio organically, you have also launched new brands.
ZEILER: Yes, we have broadened the portfolio. We launched 21 new channels last year all over the world, across kids, general entertainment, sports and factual. In total, we introduced five new brands to various markets: Adult Swim, WB-TV, Tru-TV, Oh!k and World Heritage Channel.

Broadly speaking, this was across three categories: first, we wanted to expand our global brands internationally. Cartoon Network and CNN are in almost every country in the world, so we focused on Boomerang, our second kids’ channel. We relaunched it in Latin America, where it’s already beating Nickelodeon in several markets; and we also launched it in several countries in Southeast Asia. We brought Boing to Africa. We added CNN Indonesia and CNN Philippines to the CNN portfolio of channels. TNT Series went pan-regional in Latin America. Secondly, we invested in local brands. For example, we launched Toonami, our kids’ action channel, in India and in Thailand. Oh!k launched in Malaysia and Indonesia and launches in Hong Kong soon. We entered the documentary genre with World Heritage Channel in the Philippines. Thirdly, we entered the sports arena, with our acquisition of Esporte Interativo, a Brazilian sports channel focusing on soccer, and our purchase of the pay-TV Champions League rights for Brazil. So we enriched our offering, via our international channels but also via local channels, which is our strategy.

WS: Have you also been investing in free TV?
ZEILER: Many of our channels operate in the pay-TV-environment, but we also run a couple of advertising-driven channels. We have a free-TV channel in Chile, Chilevision, which is a top three channel there. This year we will look at putting our pay-TV channels and free-TV channel together to see what synergies there are, because no other channel in Chile, not even the number one channel, can offer what we can offer, not only to advertisers but also to consumers.

We will continue to add more free-TV-brands wherever we see a chance for success. In the changing TV landscape, we are broadening our revenue streams to add scale. But more importantly, we focus on even more “must-have” brands and content. We attract our business partners and consumers with new products, services and experiences, whether they are pay TV, free TV, online or mobile.

WS: Internationally, how important is CNN?
ZEILER: CNN is a powerful brand. Wherever you go, regardless of which country you’re in, everybody knows CNN and everybody knows the strength of CNN. We distribute it to more than 200 countries. You can describe CNN’s strength in two headlines: first, the journalism is unbiased; CNN leans neither to the left nor to the right. They try to tell the story the way it is. And secondly, when it comes to breaking news, there is only one channel and that is CNN. That is the backbone of CNN and I have to say that since Jeff Zucker [president of CNN Worldwide] came on board he has done a fantastic job of revamping the brand and bringing it back to its former glory.

WS: Where do you see growth, looking ahead?
ZEILER: I see real positive developments across all regions. I am still fascinated by Brazil, our most important growth market. Yes, there are macroeconomic and political difficulties, but that comes with the territory in Latin America. You still have incredible optimism from the people there, so I still very much believe in Brazil, and also Argentina, I have to say. Second, Asia, especially India and also China. We have approached China differently, of course, not with channels. For example, we created a small emoticon, a rabbit called Tuzki. And now 600 million people who use the Chinese messenger WeChat know Tuzki. They love it and we can do a lot more with this IP, maybe even movies. I’m also excited about the possibilities in Africa and last but not least Vietnam, where people love America and American products.

WS: I understand one of the particular success stories in 2015 was the two-brand strategy of Cartoon Network and Boomerang. How has the rollout of the rebranded Boomerang been going? How does it complement Cartoon Network?
ZEILER: One of our key strategic moves has been to push Boomerang as Turner’s second international children’s pay-TV channel alongside Cartoon Network. In October 2015, the brand was repositioned as an all-animation, family-skewed proposition and we announced a big deal with our sister division Warner Bros. that includes their animation division delivering more than 450 half-hours to Boomerang, such as new original shows Bunnicula and Wabbit, a Looney Tunes Production, as well as many classic toons from the Warner Bros. library. Kids’ programming and channels are an important international business for Turner and we are glad that we have joined up our approach within Time Warner. Everyone wins with this cooperation, starting with the viewers. As a result, we have boosted the strong international market position of our kids’ channels. Examples include Latin America, where the rebranded Boomerang was by far the fastest-growing kids’ network in 2015, growing by 83 percent pan-regionally and as high as 300 percent in Brazil and 153 percent in Colombia, surpassing well-established competitors in eight countries. At the same time, Cartoon Network was once again the strongest pay-TV network on the continent, increasing its pan-regional ratings by 8 percent and outperforming the next competitor by more than 30 percent in the core target group. Cartoon Network increased its share in seven out of nine European markets as well, holding the number one spot in boys’ pay channels in eight of these. Adventure Time achieved 50 million viewers across EMEA for the first time in the third quarter of 2015, while Gumball came a close runner-up with 48 million viewers. There were also stellar successes in Asia: Turner has the leading kids’ channel in the Philippines, Australia and Thailand, and the number one international kids’ channel in Taiwan and Korea. And in India, our kids’ bouquet leads with Pogo as number two and Cartoon Network as number three.

WS: And you’ve seen increased distribution among your existing channels, too?
ZEILER: Yes, we have. Entertainment channels grew their reach even more following a series of new distribution deals. An impressive number just came in from India: the distribution of our kids’ channel Toonami is now approaching 20 million households. On the news side, CNN continues to benefit from sustained growth and is now available in more than 300 million households internationally—that’s in addition to the U.S. distribution.

WS: Do you think Netflix is going to disrupt your business, if not now, in five years?
ZEILER: Netflix is both a partner and a competitor. I’m not scared of Netflix; they do a great job. I would be scared if Netflix were the only SVOD OTT service with global domination, but I’m scared in general about global domination, not only in our industry! As long as there are many other Netflixes out there—and just look at how many SVOD services started in 2015 internationally—there will be healthy competition.

WS: I recently spoke to Kevin Reilly [the president of TBS and TNT and chief creative officer of Turner Entertainment], who is moving TNT’s programming to more serialized shows instead of procedurals. Will serialized product feed your channels well?
ZEILER: Absolutely, we need original programming, not only in the U.S. but also internationally: you need programming that makes people think, Oh, that’s new, that’s not something I’ve already seen ten times. You need much more serialized content because people like binge viewing. The direction that Kevin Reilly is going in, not only with TNT but also with TBS, is 100 percent good news for our international channels.

WS: In the past you talked about more collaboration between Warner Bros., HBO and Turner.
ZEILER: Everybody agrees that the cooperation is much better than it’s ever been, but still there is more to do. I’ll give you one example: Warner Bros.’s huge premiere this year on the feature-film side is Batman v Superman: Dawn of Justice. This will be promoted hugely across the whole Time Warner portfolio, because we all want it to be a success. And it will be a success.

WS: Are there any shows across any of your brands that have performed particularly well?
ZEILER: We continue to experiment creatively. Outstanding examples are the miniseries The Valley, which is a massive critical success in Germany, and the latest short-form kids’ program to come out of London, Apple and Onion.

WS: Is programming still your first love?
ZEILER: Oh yes! I spend so much time on a plane that I’m always watching the latest TV programming. First of all the American programs, but I also watch all the interesting new international formats. And that is why I still love working in this industry.

WS: The U.S. tends to start trends that hit the rest of the world five or ten years later. There is a lot of talk in the U.S. about skinny bundles, cord cutters and cord nevers. Is that a U.S.-based issue or does it also exist elsewhere?
ZEILER: I don’t think it’s only an issue for the United States. What you said is true though. Whatever happens in the U.S. will also spread internationally. I think our whole industry has to adapt. We have to be clear on three things. First, nice-to-have is over, [a channel is] either must-have or no-have. So when it comes to content, when it comes to channels, to brands, the ones that will survive and will survive healthily are the ones that are must-have—if they bring something to the consumer that nobody else brings. Second, the times when the channel business was simply aggregation—the days when you would buy programs, package them and distribute them linearly—are over. You need to control, if not own, most of your relevant rights. And the third thing is, of course, we also have to develop much more in the digital space, including digital-only propositions. At Turner, a couple of years ago in America, we bought Bleacher Report, a digital sports fan company. It’s a leading sports website with a very innovative app called Team Stream. This is one of the projects that, together with my colleagues in the U.S., I really want to develop internationally, at least in many of the bigger markets.

WS: ESPN was considered a must-have channel, and you saw what happened to ESPN and The Walt Disney Company’s stock went down. So, what is must-have these days?
ZEILER: Must-have is something that the consumer really wants, but is also ready to pay the right price for. That’s it; the two have to be in a certain balance with each other. We have one mantra at Turner, we have to put the consumer first in all of our decisions, when it comes to content, when it comes to channel brand positioning, when it comes to our digital strategy, and also when it comes to the price the consumer has to pay.

WS: So you don’t have a problem if an operator decides to sell à la carte?
ZEILER: I think the channel bundle has some advantages and I don’t believe there will be a complete de-bundling. What we see internationally is that there is still a bundle, but the tendency is a little bit more towards à la carte, a little bit more towards what the consumer really wants. For example, some of the European distributors offer a basic package where half the channels are set, and the other half is left to the consumers to select what they want. So it’s not complete à la carte, but it goes both ways. I think in the future we will see much more of this business model from affiliate partners all over the world.

WS: Compared to years ago, when watching television was a passive activity, how do viewers want to engage with content nowadays?
ZEILER: We are ready to aggressively pursue relevant opportunities to expand further beyond traditional TV. More than ever, strong brands with a clear identity help us forge connections with audiences who know what we stand for and that they can rely on us for innovative, user-friendly content across any screen. If we continue to marry first-class content and storytelling with evolving technology in exciting new ways that put the consumer first, and if we evolve our offering in step with changing consumption habits, we’ll be well positioned to continue to deliver unbeatable experiences that will keep them coming back to us for more.

Just to give a few examples, we have launched four TV Everywhere apps across Latin America, and we closed a landmark deal with Spotify in Europe to bring Adult Swim directly to its Millennial user base. For news, CNN’s digital success is nothing short of outstanding: CNN Digital is a leading network for online news, mobile news and social media and its recent new ventures last year alone include Spanish-language CNNE.com.

Our kids’ IP is ready for OTT and SVOD ventures. Cartoon Network continues to grow the digital native audience with the rollout of Cartoon Network Anything and Cartoon Network Watch & Play across all regions, while Boomerang also launched a Watch & Play across the Asia-Pacific region. Within EMEA, we achieved a 200-percent lift in Cartoon Network program views on YouTube, and we have introduced multiple new apps, which have collectively enjoyed 11.7 million downloads.