Hans-Holger Albrecht

April 2007

By Anna Carugati

As the president and CEO
of the Modern Times Group (MTG), Hans-Holger Albrecht sits at the helm of the
top free-TV and pay-TV operator in Scandinavia and the Baltics and the biggest
shareholder in Russia’s largest independent television network, CTC Media.
MTG’s Viasat Broadcasting operates free-TV channels in ten European countries
and pay-TV channels in 22 European countries, reaching more than 80 million
people on a daily basis. MTG owns Strix Television, a production company that
provides TV formats to broadcasters in 75 countries. MTG also runs a commercial
radio operator in the Nordic region and the Baltic countries and a home
shopping division with the largest online retailer in the Nordic region. While
intent on improving MTG’s existing businesses, Albrecht is keen on growth
opportunities in the new-media world as well.

TV EUROPE: What opportunities are there still for growth in
free TV and where are they?

ALBRECHT: In Eastern Europe there is big potential for us
going forward, and we are already present in many of those markets. Russia is
growing quite rapidly. The Baltic states are starting to grow by double digits
and the Hungarian and Czech markets are quite strong as well. We are looking
for opportunities to expand our business in those regions.

On the Scandinavian
side, growth will be driven mainly by two factors. The first is digitalization,
which allows us to have broader and better technical coverage so we can reach
more people. In addition, the second and third channels we have launched in
those markets provide the opportunity for us to increase our market share.

The second growth
opportunity is that in Scandinavia the free-TV share of the advertising pie is
fairly small—it’s below 30 percent—so TV advertising should grow
faster than ­other advertising segments compared to the other European markets.

TV EUROPE: Are you satisfied with the performance of TV Prima
in the Czech Republic?

ALBRECHT: Absolutely. Fi­nancially we are ahead of where we
expected. When we bought the channel, a little more than a year ago, we always
said it would be a challenge and that we would have to change things. We had to
bring in new management, and that takes time. In 2006, the growth of TV Prima’s
advertising revenues was very strong and the ratings are on track as well.

TV EUROPE: And are Viasat 3 Hungary and DTV in Russia going
according to plan?

ALBRECHT: In 2006, Viasat 3’s audience share grew and it had
good advertising income as well, but it took us longer than we expected. At DTV
in Russia, since the second half of last year, ratings have been very strong
and we see lots of opportunities for us going forward.

TV EUROPE: On the pay-TV side of your business, what has
allowed you to maintain such good premium-subscriber growth? What have you been
offering?

ALBRECHT: It’s a combination of things. The first is that we
made an investment in the premium segment. Two years ago, we launched three
sports channels; now we have four sports channels. We’ve launched six movie
channels, so we really invested in premium brands and premium products. The
second point is that we have been very consistent in continuing to promote the
premium package and in explaining to the potential customer that you can, of
course, have our basic package, but if you really want to have good
entertainment and all the services you want, go for the premium package. And it
has worked pretty well; this has been a very concerted marketing strategy for
the last three or four years.

TV EUROPE: Because television markets are so crowded in so
many countries, how do you identify the channels that have the best potential
for attracting audiences?

ALBRECHT: We do a lot of traditional research, and we found
out that in Denmark there was a great demand for news, rather than for more
sports or anything else. So we added TV2 News to our platform. That is the kind
of thing you find through research.

And on the premium
side, you have to go for the traditional big products, which are sports and
movies—sports, of course, depends on the local market. And documentaries
always work well. Those have been the major drivers. A travel channel is nice
but it doesn’t move the needle much. The consumers are more into the trend of
saying, “I want to watch whatever I want, whenever I want.” It’s the
convenience factor that is driving the business more than adding a new small
channel.

TV EUROPE: That leads me to my next question. What are
consumers asking for beyond regular TV?

ALBRECHT: We are offering television via broadband, and I
reckon that by the end of this year more than 10 percent of our customer base
will be broadband developed in Northern Europe. And
then we have a lot of streaming and on-demand functions. We are the first ones
who brought the Slingbox over for our customers, and we can see that consumers
are demanding products like that and like the PVR [personal video recorder] product, called Viasat Plus. The time-shifting and independence for the
consumer will be the driver for the coming years.

TV EUROPE: PVR penetration is much higher in the U.S. How
have you seen the rollout of your PVR?

ALBRECHT: It is catching on. When we launched we benchmarked
ourselves to the figures of Sky’s PVR [in the U.K.] For Sky, it took nearly two
years marketing their box before they started getting to an acceleration point
in sales. We are seeing the same thing. It’s very slow going in at first and now you are seeing it start to accelerate. We
haven’t been subsidizing the box too much. There are other things we can do.

TV EUROPE: Is the advertising market concerned about PVRs,
and what can you do to work with them?

ALBRECHT: We have found that PVRs are not used mainly to
skip advertising; they are used for different things. For our viewers, it’s
more the convenience that the PVR offers: if they come home late, they can
still watch their favorite documentary or series or whatever.

We tell advertisers
that we have to adapt to consumer needs. We have to adjust and look for
creative ways of advertising, like shorter breaks, or on-demand services
prepaid by advertisers. They have to be creative, because if commercial breaks
are funny, people don’t mind watching [them].

TV EUROPE: Is advertising in the Central and Eastern European
markets growing faster than in Western Europe?

ALBRECHT: Yes, by double-digit growth. Last year, Russia was
growing at over 30 percent. For this year we are expecting the same rates,
between 20- and 30-percent growth. The Baltic states are in the double-digit
growth area, and the Czech market has been slow in the last year, but should
grow faster this year.

TV EUROPE: How do you want to increase your broadband and
mobile offerings?

ALBRECHT: We offer the full channel package on broadband and
consumers get exactly the same offering they have on satellite, and broadband
take-up has been very strong. Now we are introducing new on-demand services and
other features, but gradually. The main purpose at this stage is to get the
traditional television product out and then bring in the more interactive
features.

On the mobile-phone
side, we are still in a trial-and-error phase.
We are in the test phase trying to learn whether people want to watch normal
television programming on their mobile phones, or if they want to have only
special features like news or sports. Therefore we have to figure out exactly
what consumer demand will be. That we don’t know yet, but we are front-runners
in our markets when it comes to this technology.

TV EUROPE: How is the online networking community
Playahead.com doing?

ALBRECHT: Hopefully very well, because we just bought it!
It’s the second-largest online community in Scandinavia. It’s very strong in
the younger demographic, particularly among 12- to 25-year-olds. And we see it
is the perfect fit for us in terms of a) reaching those young demos and
understanding them, and b) developing ideas around the product. [It has] a very
strong management team, and therefore it should continue to grow quite rapidly
in the coming years.

TV EUROPE: Do you continue to focus your attention on
Scandinavia and Central and Eastern Europe and Russia? Are you not interested
in Western Europe?

ALBRECHT: Western Europe is an interesting target, but those
markets are quite highly valued at this stage. We look at those markets on a
case-by-case basis. Right now we are focused on Northern Europe and Eastern
Europe, and then we’ll see what next year will bring. We may do something in
Europe or maybe go outside to Africa or Asia.

TV EUROPE: How do you manage to offer the best in sports even
though the cost of sports rights continues to escalate?

ALBRECHT: We deal with sports-rights agencies in many
places, so we have a very good relationship. We are a big customer because we
buy for so many countries. We don’t participate in any bidding wars for sports
rights. Sometimes we say, “No, we don’t need that,” which has worked quite well
for us.

TV EUROPE: How do you explain the key to Strix’s success?

ALBRECHT: There are two reasons. First, they have an open
attitude toward new things and they have a willingness to try, even if they may
fail. If we fail with a TV show in Scandinavia, it doesn’t have as big of an
impact as ABC in the U.S. or RTL in Germany failing with a show. The second
point is the cultural advantage we have among the Swedish people. They are
quite innovative and they are also quite good business people—that
combination has turned out to be quite favorable.

TV EUROPE: When you see a new technology coming up, how do
you determine if you should allocate a certain amount of money to try it out,
and what is the company philosophy on research and development?

ALBRECHT: We have a philosophy that we launch products, not
plans. We have already announced this year that we will invest in VOD and
streaming, and we have been running tests on DVB-H [mobile TV]. Our new-media
business area works actively on developing and leveraging online assets, and
our acquisition of Playahead in the beginning of the year is yet another
example of our commitment to being where the customer is, irrespective of
platform.

The good thing is that we
have a long-term view, so we would not jeopardize our potential for growth for
the next three, four or five years. We also have a long-term Board and
shareholders, which give us the possibility of thinking long-term and to
evaluate various options and to build the business. We have to deliver returns
to our shareholders, but if it takes investments because we see an opportunity,
we will do it, because long-term growth is very important to us.