Gerhard Zeiler

This interview originally appeared in the MIPTV 2014 issue of World Screen.

CNN and Cartoon Network are two of the most recognized brands in the world. They are part of a portfolio of 130 channels available in more than 200 countries. Gerhard Zeiler, the president of Turner Broadcasting System International, oversees operations outside of North America and is charged with expanding the business by launching new channels and fostering greater cooperation with Turner’s sister companies, Warner Bros. and HBO.

WS: Turner Broadcasting International has recently undergone significant restructuring. What was the goal of the restructure?
ZEILER: Starting such a substantial restructure was not an easy decision, and it is especially difficult for those who are affected personally. But it was absolutely necessary in order to put Turner International in the best possible position for further growth. It wasn’t only about saving costs. Even more, it is about changing our mindset. We had to challenge our old operating models and our traditional thinking as we built a structure to meet the needs of our current business rather than an organically evolved old structure. In the two regions where we did the restructure, in Europe, Middle East and Africa on one hand and in the Asia-Pacific region on the other hand, we still had a very centralized structure, whereas in pay TV now there is the need to go local. There is the English word “devolution”: when the king gave more power to Scotland and to Wales, that was the process of devolution. And that is what I would like to compare our restructure to—we gave more power, more responsibility and more accountability to the local management, whether it was the U.K., Germany, Spain and Italy; or Indonesia, Philippines, Thailand, India and Japan. That is a change in mindset, almost a cultural change in the organization.

The second change was the change in management. Giorgio Stock is our new president of the EMEA organization. He started last April with great energy and efficiency. We have a strong stable of brands in Europe. We also a have a strong slate of comedies in our kids’ business, and we are seeing universal popularity for our homegrown hits Adventure Time, The Regular Show and The Amazing World of Gumball. After a short period of time, we have already seen an increase in our ratings and in our audience shares for Cartoon Network and Boomerang in most of the European countries, and amazing 30- and 40-percent increases in our ratings and audience shares in the U.K., France and Germany; those were Giorgio’s first successes with his teams.

In the Asia-Pacific region, Ricky Ow is our new president since mid-January. He is Asian, and he knows an incredible amount about each of the countries in the region. His experience in launching local channels and establishing local and regional brands is known to everyone in the region. And that is exactly our goal: launch a lot of new channels. Two other cornerstones of our strategy are to increase the cooperation with our “brothers,” Warner Bros. and HBO and focus on new digital ventures.

WS: Turner has historically been very strong in news and children’s. Are you looking to diversify into other genres as well?
ZEILER: Definitely. Kids’ and news are actually the minority of what Turner offers, and you can see our strength in Latin America. We have a strong slate in entertainment, movie channels, series channels and also factual-entertainment channels. Based on this experience, it is one of our main goals to expand beyond the kids’ and news genres in Europe and in Asia.

WS: The economies in Latin America have gone up and down, but recently the region is quite strong, isn’t it?
ZEILER: It’s a fantastic business in Latin America. Together with HBO and Fox we are the leaders in the pay-TV business. There are two reasons for it: first, we started at the right time and we never stopped investing. Last year, for example, we acquired a stake in Esporte Interativo, a Brazilian sports channel. Secondly, we accepted years of investments until they paid off. During the difficult years of financial crises, we stayed in the markets, watching some of our competitors pull out. 

If you look at the performance of our channels, you will see that they are experiencing great success. Cartoon Network is the number one kids’ channel in a lot of the markets; TNT, our flagship general-entertainment channel just surpassed the 50 million subscriber mark and is together with FX the top ranked entertainment channel in the region; Space, WB and TCM belong to the top movies and series-channels; TruTV and Infinito are two well-known brands in the factual genre and CNN Español is a must-have for all platforms in the Spanish-language markets. Last but not least, we started in the previous year to roll out TBS very funny, a young comedy and sitcom channel.

But this is not the end of the good news. Latin America is still a region with incredible growth potential. Look at Brazil: Today it has a pay-TV penetration of roughly 30 percent. And I have found nobody, who doesn’t predict that this will go beyond the 50-percent mark.

WS: Jeffrey Bewkes once told me he considered CNN “a jewel in the Time Warner crown.” CNN in the U.S. is undergoing significant programming and anchorperson changes. CNN International remains very well received around the world, doesn’t it?
ZEILER: I couldn’t say it any better than Jeff did. It really is a jewel in the Time Warner crown because it’s such a huge brand, not only in the U.S. but worldwide. CNN International is the number one international TV news channel according to all major media surveys across Europe, the Middle East and Africa, the Asia Pacific region and Latin America. If there is breaking news, everyone around the world tunes in to CNN first. We also have quite a lot of brand licensing deals between CNN and local broadcasters. They want the CNN knowledge and the CNN feeds. We are very proud that CNNI is part of our offer.

WS: You have been reaching out to HBO and Warner Bros. What opportunities are there for Turner Broadcasting to work with its sister companies?
ZEILER: When you look at Time Warner today and you compare it to five years ago, there is a huge difference. Today there are only four divisions: HBO, Warner Bros., Turner and Time Inc. and in the not so distant future it will be only HBO, Warner Bros. and Turner. So it is only natural that we cooperate much more closely. We really care about each other, about each other’s successes. Jeffrey Schlesinger [president of Warner Bros. Worldwide Television Distribution], Simon Sutton [president of HBO International and Content Distribution] and I are talking regularly [about] how we can work together in a way that helps the whole of Time Warner.

WS: Are you looking to make any acquisitions? What type of assets would fit into the Turner portfolio?
ZEILER: The mandate I have from my shareholders is to grow the international business significantly. In order to achieve that, we will focus on organic growth projects, but we will also scan the market for acquisitions, which fit strategically, especially in markets where we either already have scale or in markets with high growth expectations.

WS: Would acquisitions be restricted to pay TV or also include free TV?
ZEILER: Both are possible. The important parameter is not whether it is a free-to-air or a pay-channel group. It is whether we can get scale with an acquisition in an attractive growth market.

WS: Does Turner leverage its global reach when dealing with some categories of advertisers? What other advantages does Turner have when going after advertising revenues?
ZEILER: The overwhelming part of the advertising sale is still done on a local basis as not only most of the channels, but also most of the advertisers, are organized locally. Having said that, we also see that more and more advertisers are showing interest in leveraging big media companies. One of the brands that uses this with great success is CNNI, where we sell the inventory mostly globally.

WS: Profits at Turner International have been good. What has been driving growth?
ZEILER: The profit growth was quite significant in the last year and was due to two factors: one was the incredible revenue growth we still have in Latin America, both in subscribers and advertising revenues. Secondly, we also saw the first positive results of the efficiency drive, which we started in Europe and Asia Pacific.

WS: There is a lot of talk of cord cutting in the U.S.; do you see that being an issue internationally?
ZEILER: We don’t see a lot of cord cutting internationally. Yes, you could see some subscriber losses in Southern Europe last year, but that was mostly due to macroeconomic factors. Internationally we see quite the opposite trend, especially since in Latin America and Asia the growth of pay TV is still significant.

WS: In the U.S. many people are asking that cable companies sell channels à la carte.
ZEILER: À la carte so far is not an international trend, although we see for example in Scandinavia some of the platforms experimenting with giving subscribers a choice, which channels should be part of their individual basic package in addition to a fixed set of channels. It is too early to say, whether this will be a trend beyond Scandinavia in the coming years or not.

WS: Since there is a lot of on-demand and online streaming, many people are saying the strength of linear channels will lie in event programming and appointment viewing. Do you share this view?
ZEILER: Linear channels are here to stay and they are the bulk of how people watch TV. But VOD will continue to grow as this is an additional way of viewing. Five or ten years ago people bought DVDs, now they can watch on demand. You are right in forecasting that linear channels will rely more on event programming in the future, but they also will have to focus on the traditional genres in order to remain strong.

WS: Is Turner allowing viewers to enjoy content on whatever screen they want?
ZEILER: With our kids’ channels, a huge percentage of our programming is owned by us, so it’s possible to serve the catch-up rights to the platforms or have our own catch-up services. And yes in our deals with the platforms we always try to give them the rights they need without destroying our own linear networks.

WS: For years you were at the helm of The RTL Group, one of the largest broadcast groups in the world. What were your main concerns and priorities as you managed broadcast stations, and how were those different from the ones you have today managing pay-TV channels?
ZEILER: They are very similar. You need strong brands whether you are in a free-to-air or in pay-TV business, whether you own channels that attract the whole population or you have thematic channels that only reach specific target groups. You also need content that people want to watch and, last but not least, you need efficiency in your operations. It’s quite simple: the more the people who run the stations are passionate about the brands and product, allow creativity to happen, and have the courage to try new things, the better the results will be. Whether it’s free to air or pay TV, there is not such a big difference.