Exclusive Interview: MTG’s Hans-Holger Albrecht

June 7, 2012 World Screen Top Stories

PREMIUM: Hans-Holger Albrecht, the president and CEO of Modern Times Group, tells World Screen how he has been successfully building up the company’s growth areas, steering the group through turbulent economic times in some territories, while always looking ahead to new technologies and opportunities.

 

With operations that span four continents and include free TV, pay TV, radio and production businesses MTG is an international broadcast group whose business segments include Viasat Broadcasting’s free-TV Scandinavia, pay-TV Nordic, free-TV emerging markets, pay-TV emerging markets and CTC Media, which is Russia’s leading independent TV broadcaster.
 
Embracing the potential of the Internet, MTG has successfully launched the online streaming service Viaplay. This over-the-top service was the first of its kind in Scandinavia, and provides Internet access to thousands of hours of movies, sports coverage, TV series, and catch-up services of favorite free-TV channels.
 
WS: 2011 was a tough year with the Eurozone financial crisis. Did you have to make adjustments in your company’s structure in order to find new business opportunities?
ALBRECHT: MTG has always had an effective operating structure, which has enabled us to retain tight cost control whilst continuing the development of our businesses. When the global financial crisis hit in 2008 we went through each of our businesses in order to streamline them even further, but continued to invest selectively in content and technology across most markets. The changes in the competitive environment and our own evolution over the last few years have also made it necessary to adjust our management and operating structures. Last fall, we adopted a new operating structure, which enables MTG to become more nimble, and facilitates even more efficient information sharing and idea transfer across the group. We have simplified our reporting lines, made country management structures more effective and adopted regional management roles and responsibilities.
 
WS:What business areas do you expect to perform well this year?
ALBRECHT:We expect to continue to grow as a group in 2012, but are also investing in our operations in order to drive their development.
 
All three Scandinavian advertising markets are expected to continue to grow this year, albeit at lower rates than in 2011, and we have been investing in our programming schedules in all three Scandinavian countries.
 
In the Eastern European TV advertising markets recovery is still lagging, but the MTG media house of multiple channels is well established in all of our Eastern European countries, and we are set to capitalize on bundled advertising sales to differentiated audience groups when the recovery takes place.
 
Our Nordic and emerging markets’ pay-TV platforms and channel businesses continue to grow and our Nordic free-TV and pay-TV businesses have high margins by industry standards. At the same time, our emerging markets’ free-TV and pay-TV businesses are profitable again, despite the investments we have been making in their development.
 
Our investments moving forward in 2012 and beyond are focused on three key areas: technology, content and territories. In Scandinavia in particular we have invested heavily in our spring free-TV schedules in 2012. On the technology side we have invested in our satellite platforms in Ukraine and Russia, the development of our online pay-TV service Viaplay and in additional HD and 3D TV ser­vices, as well as the re-branding of our premium pay-TV channel offering. Our Viaplay online pay-TV service is evolving and becoming more popular, and we recently launched it in Russia, following its initial rollout and expansion in the Nordic region.
 

 

WS: What are the challenges in the emerging markets?
ALBRECHT: The recovery in Eastern Europe has lagged that in Western Europe, with low or no growth in TV advertising spending and the incumbents maintaining pricing pressure. We did take viewing and audience shares across almost all markets during 2011 and ended the year in a stronger position than we started it, with more channels, higher sales and a return to full-year profitability for both the free-TV and pay-TV businesses in the emerging markets.
 
Overall, we are well positioned in these territories, with media house portfolios that offer incremental reach and complementary audience profiles in each of the countries. Our businesses have high incremental margins, and we are convinced that these businesses will deliver high growth and profitability levels once we see a recovery in the markets. The timing of this is difficult to predict, but it’s a case of “when” rather than “if.”
 
WS: What are the opportunities in the Russian market?
ALBRECHT:Russia is the biggest market in Europe and it is growing. More than 50 million Russians, over 40 percent of the population, already use the Internet, and TV content is one of the biggest drivers of Internet usage. In April this year we launched the Viaplay online pay-TV service in Russia, and can now offer unlimited on-demand access to streamed TV series and movies. Russia has been one of the big drivers in the strong performance of our pay-TV emerging market operations, which delivered 13 percent year-on-year sales growth in 2011. An important proportion of this growth comes from our Russian mini pay-channel business, which still has good growth opportunities going forward in terms of penetration and financial perfor­mance. In the meantime, we continue to develop our joint-venture Raduga satellite platform, which is still in a loss-making development phase, but which is continuously improving its profitability.