Home to some of the best-known media brands—including CNN, TNT, Turner Classic Movies and Cartoon Network—WarnerMedia owns and operates bouquets of channels, websites and apps that reach millions of viewers around the world.
Gerhard Zeiler has witnessed the development of the international television business from multiple perspectives and learned that a brand is relevant only when its programming is must-see, entertaining and engaging. After working as a spokesman for ministers and chancellors in his native Austria, he was secretary general at the Austrian public broadcaster ORF. Then he became CEO of the German commercial station Tele 5 and CEO of RTL 2 in Germany. Zeiler returned to ORF as CEO before leaving to run RTL Television, where he helped turn the broadcaster into the market leader. In 2003 he was elevated to head up the RTL Group, where he championed the concept of a family of channels—a group of channels, each targeting a different segment of viewers—in response to the audience fragmentation.
In 2012, Zeiler was named president of Turner International, where he has overseen a group of media businesses during a time of great transition. As audiences are fragmenting even more rapidly, due to so much choice from linear, on-demand and streaming menus, brands need to be relevant and offer addictive programming, and they must also be available on whatever screen, device or destination viewers want them. WarnerMedia must not only curate content for linear channels, which have the unique ability to create must-see events, but also go directly to the consumer and serve content to passionate communities of fans.
Zeiler spoke to World Screen earlier this year and outlined Turner International’s many accomplishments and assets. Cartoon Network has been diligently placing its content, characters and games everywhere young viewers are, on all screens, in an array of consumer products, theme parks and even branded hotels and cruise ships. The Turner channels have been producing hit local dramas in Germany, Spain and Latin America, while also serving passionate sports fans in myriad ways.
In March, WarnerMedia’s CEO, John Stankey, announced a major reorganization of the company in which Zeiler was promoted to chief revenue officer, in addition to overseeing Turner’s international businesses. We reached out to Zeiler and asked him about his new role and responsibilities.
WS: You were recently appointed WarnerMedia’s chief revenue officer. Tell us about this new role.
ZEILER: John Stankey wanted a single, unified WarnerMedia affiliates and advertising sales group and asked me to lead it. This role comes in addition to the strategic oversight for Turner’s international businesses and will add responsibility over all WarnerMedia network affiliate sales and advertising sales businesses for me. The whole new organization model of WarnerMedia means that we finally act as one company, and that’s absolutely the right thing to do: cooperate more. While Time Warner/WarnerMedia always was a giant, it did not always act as one. Playing together as one team will help us attract even more and better creative people, help us in our engagement with our fans, and it will help us with our sales business. One more thing I like about this setup: a strong commitment to advertising. I am really looking forward to this new challenge.
WS: How do you define television today? Is it still meant to attract mass audiences or does it target passionate communities of fans?
ZEILER: It’s the golden age of television. There has never been more video consumed than there is today. There is so much choice; it’s a viewer’s paradise. For us, it means we need to be where the consumer wants us to be. Of course, depending on the brand, we still want to reach a mass audience, but the people we are after are the fans. I’ll give you an example with Cartoon Network. We are in [more than 400] million homes currently. But it’s not enough to only have linear channels. We need to do much more. We run apps, [we have] Cartoon Network Watch and Play, we develop games, we feed YouTube channels and we organize a lot of events. We have a water park in Thailand. A Cartoon Network cruise ship is being built, as well as a Cartoon Network hotel. That’s how we serve our fans. We need to be in their homes, and we need to be available when fans want to connect with us.
WS: How are you evolving brands as viewing habits change?
ZEILER: It has to be through a 360-degree commitment. Let’s lead with Cartoon Network again—I want to share two examples with you. First, one of the hit shows we have is The Amazing World of Gumball. As an extension, our people developed Gumball VIP, which combines the linear-TV viewing of the show with second-screen activity. Kids answer quiz questions and take part in a worldwide competition—it’s integrated and interactive. Another example is Toony, our own Cartoon Network YouTuber—a puppet that speaks the YouTube language.
WS: How is Turner offering its content directly to the consumer?
ZEILER: We started with a product called Toonix on the kids’ side together with HBO in the Nordic countries. We are pleased with the development of our subscriber numbers. While this is part of an HBO product, we are also making offers outside the hard bundle and are working with other distributors for our Toonix app. A Boing app in Italy triggered more than 1 million downloads after only four weeks. In December we also launched it in Spain, and we quickly registered almost half a million downloads. We are still in the experimental phase, as we discover what works and what doesn’t, but we have to [be in the direct-to-consumer market]. One thing is clear: all subscription services want kids’ content because kids’ content helps reduce churn.
WS: Turner has had success with sports as well.
ZEILER: Sports and Turner belong together. Look at the NBA, NCAA and Major League Baseball in the U.S.—this is part of Turner’s DNA. I’m really proud and very happy that in Latin America we are now revolutionizing the fútbol fan experience. Together with Fox, we bought [the rights to] Argentina’s first division soccer league for the next ten years for a premium service that is hugely successful—it has more than 2 million subscribers after the first year. That’s much more than anyone would have imagined. In Chile, we control Canal de Fútbol and exclusive rights to broadcast all Chilean professional soccer matches for a period of 15 years. In Brazil, we have contracts with seven Série A clubs. As TNT and TBS do in the U.S., we use TNT and Space in Brazil to offer sports in two superstations. We show the Champions League and a few Série A games. That will be an important new pillar for our business.
WS: How is the Latin American business?
ZEILER: Latin America is our powerhouse. We are incredibly successful with our content. Turner has a 25-percent audience share in basic pay TV pan-regionally and is the industry leader in each country except for Brazil, where Globosat is number one. In Mexico, we [alternate with] Televisa—every single week, one of us is number one, one is number two. In all the other countries, we are number one. For five years in a row, Cartoon Network has been number one in the kids’ segment. Our entertainment channels are also really successful, with TNT, Space, TNT Series and Warner Channel all within the top 15. Latin America is huge for WarnerMedia.
WS: So Latin America is still a strong market, even with the economic and political challenges so many countries are facing?
ZEILER: We hope we are seeing the light at the end of the tunnel. Brazil was difficult in recent years. Previously, it had experienced an incredible explosion of pay TV, as the middle class finally had enough money to afford pay TV. But in the last three years subscriptions went down slightly, by 1 million per year, due to the economic upheaval and political uncertainty. We now hope for a turnaround in Brazil. Mexico is still growing. Chile is still growing. Colombia and Peru are significantly growing. Argentina already has quite a high pay-TV penetration. It is doing well despite the difficult economic situation.
WS: Do you see growth in Europe and Asia?
ZEILER: Yes, I do see growth—not in every country, but especially in the two European countries with a rather low pay-TV penetration so far: Spain and Germany. In Spain, Telefónica and Vodafone did a good job in the last two years. We saw a significant increase in penetration. And in Germany, we are also growing. In Asia, parts of Southeast Asia are problem children. Five years ago, I believed that the pay-TV markets in Indonesia and the Philippines were ready to grow significantly, but so far, expectations haven’t been met. India, on the other hand, is still doing great. India will grow for the foreseeable future.
WS: How does Turner stand to benefit from the AT&T merger? I’ve read that AT&T’s advertising business, Xandr, is working with Turner.
ZEILER: I have always been a proponent of the AT&T/Time Warner deal because I’ve always favored content and brands marrying data and direct-to-consumer capabilities. If executed well, this is a marriage made in heaven. The two [most important] strategic priorities for AT&T and WarnerMedia are, first, direct-to-consumer and, second, increasing the value of advertising.
Xandr is AT&T’s division that deals with advertising. What is the current situation when it comes to digital advertising? Only two companies get the bulk of the money: Google and Facebook. The third with the potential to grow is Amazon. A lot of advertisers want more choice; therefore, the media networks need to deliver the same standard of addressability as the digital giants do. We need to combine data with the great content we have.
Last but not least, AT&T has more than 300 million direct-to-customer relationships. From a strategic standpoint, that is all you need to develop a much more valuable offer for advertisers. Of course, now this has to be executed well, and it will probably take a little bit of time.
The top priority, as John Stankey, my boss, announced, is the direct-to-consumer business. We will start in the fourth quarter of this year in the United States. Please understand that I can’t say more today, but one thing is for sure: this is a priority not only for WarnerMedia but also for AT&T.
WS: This reminds me of the beginning of commercial television in Europe in the 1980s—so much was driven by pent-up advertising demand.
ZEILER: When I started at ORF in Austria in 1986, we had an ad department that was not selling—it was allocating advertising. And the maximum an advertiser could get was seven spots a month! Sometimes, because the head of advertising had some friends to please, he gave one or two companies eight spots per month, creating an uproar. That is the reason why private television boomed so much when it started: there was a need for it.
WS: Today, we hear so much about algorithms—they suggest what we should watch next, and streaming services use them to decide what to acquire or produce. In this data-driven landscape, what role does gut instinct still play?
ZEILER: There is so much change in our industry that we must approach our work with an open mind every day. I hope I have one. But still, like many people in the creative industry, I am also a bit reluctant to think that algorithms and data will dominate the creative process. I still believe creative instinct is, and hopefully will be in the future, more important than data alone. But data will help, no doubt about it.
WS: Tell us about some of the programming successes across Turner’s services.
ZEILER: Let me start with 4 Blocks, a crime story about Lebanese drug dealers in Berlin—that was a huge hit, and we sold it successfully to Amazon Prime Video. Further, we produced Arthur’s Law, a black-humor comedy. Our American sister company TBS bought the broadcast and remake format rights, a first. Then, we co-produced the crime series Hackerville together with HBO Europe. In Spain, we have a new comedy called Vote for Juan, about a Spanish agriculture minister who goes for the party leadership. You can best describe it as a Spanish “male Veep.” It instantly became the most-watched TNT original production in the history of TNT Spain.
In Latin America, we produced six series last year, and this year we will probably double the amount. We focus on local productions. Some we produce on our own and some we co-produce with other broadcasters in Argentina. A biopic in Brazil, Os Irmãos Freitas, tells about the most famous boxer there and his brother. A biopic in Mexico, Bronco, is in production and tells the story of a famous ranchero band. We shifted programming budgets from acquisitions to original production. That’s the future, and that’s where we have to go.
On the kids’ side, we do a lot of programs in Asia, such as Lamput and Beat Monsters. In Europe, we produce the global animation hit The Amazing World of Gumball. The same team created the Apple & Onion series and games, as well as the sci-fi sitcom Elliott from Earth. This is all new content that comes from international markets to attract fans worldwide.
WS: And CNN remains one of Turner’s top brands?
ZEILER: CNN is the gold standard when it comes to independent news. The brand positioning of CNN, whether CNN in the U.S. or CNN International around the world, is so easily described. First, the stories are told with an unbiased approach. “Facts First,” as they say. Second, whenever there is breaking news, CNN is there reporting about it. The fact that our colleagues are doing something right is proven by the fact that in the last year we won 33 awards, including Emmys, AIBs and Peabody Awards—I can’t even list them all. That is the success of CNN and CNN International. We are also the most digital news company worldwide. When it comes to digital, nobody has a reach like CNN has. Jeff Zucker [chairman of news and sports at WarnerMedia] and his team have done an incredible job in recent years.
WS: Much of what you have mentioned goes beyond traditional linear channels. How have you been able to diversify Turner’s revenues?
ZEILER: We knew that linear was not enough. We had to find innovative ideas to get to our clients and viewers, but also come up with ways to monetize our content and brands. So, one diversification we developed is what we call location-based entertainment. That was an initiative we set up four years ago. We are not in the business of investing in theme parks ourselves; instead we find partners who specialize [in theme parks]. That’s our way to present our Cartoon Network brands in, as I said earlier, a water park, hotel or cruise ship. I mentioned our YouTuber puppet called Toony and Gumball VIP. When it comes to consumer products, Turner’s international goal is to triple revenues within the next five years. And there is one thing we must never forget: all these innovative ideas are developed by our people. We have a people-first policy. They define the future of our company.