Exclusive Interview: RTL Group’s Guillaume de Posch & Anke Schäferkordt

September 20, 2012 World Screen Top Stories

PREMIUM: Guillaume de Posch and Anke Schäferkordt, the co-CEOs of the RTL Group, talk to World Screen about how they are working in concert to shape the future of the company and position it to succeed in the digital age.

 

WS: What has been your overall strategy since taking over as co-CEOs?
SCHÄFERKORDT: Since taking over as joint CEOs of RTL Group in mid-April, we have conducted a comprehensive review of our corporate strategy. RTL Group is a very profitable company, with many growth opportunities and a clear strategy to pursue them. Together with the management teams in our operations we have defined three main investment areas: core, content, digital. We see significant growth potential in all three areas. Core: here, our main goal is to optimize and develop the existing broadcasting business and invest for growth in new territories. This includes launching new channels such as RTL Nitro and 6ter, and increasing distribution revenue from platform operators.
DE POSCH: Our second main area is content: we will further develop and acquire intellectual property and exploitation capabilities, in particular in areas such as general entertainment, U.S. drama, kids entertainment, gaming and online video networks. FremantleMedia will be key for this strategic goal, and we’ll continue growing our content arm through a combination of organic growth and acquisition. FremantleMedia will focus its investments on two goals: fuelling its pipeline of intellectual property and serving new digital audiences, for example with YouTube channels or gaming. And third, we will build sustainable digital business models with strong cross-platform presence on all devices and screens, with Internet properties and new on-demand services—our brands will be present wherever our audiences look for quality content.
 
WS: What factors have contributed to the success of the RTL family of channels in Germany?
SCHÄFERKORDT: We have established strong channel and program brands in Germany’s very crowded TV market, and are continuously developing and successfully playing them on all platforms: on air as well as online and mobile. Our setup is complementary, to ensure that we reach a range of different demographics. RTL Television offers programs for the whole family across all relevant program genres: drama series and movies are just as much part of this as large-scale shows, comedy and sport events, magazines and news. Vox’s premium line-up with U.S. series, movies and first-rate commissioned productions caters more to a female audience. With its focus on news, business and talk, N-TV is our news channel. Super RTL is the strongest children’s brand on German television and RTL II is a contemporary channel for young audiences.
 
WS: How have the digital channels been performing and do you have plans to launch more?
SCHÄFERKORDT: We are very happy with the development of the pay channels we launched a good five years ago: RTL Crime, Passion and RTL Living. They have a very decent reach, all three with very sound results. In addition to popular programs from the rest of the family of channels, we also air original, fresh premieres. For instance, this fall The Body Farm, a BBC produced crime series—spun off from Waking The Dead—will debut on RTL Crime; Passion will premiere the award-winning screen adaptation of Elisabeth Gaskell’s North & South; and Hugh’s Fish Fight—a documentary series that triggered a pan-European campaign for sustainable fishery—will make its debut on RTL Living.
 
On top of this, we launched a new free digital channel in April: RTL Nitro features programming for a broad target group, with a focus on male viewers. The new channel ideally complements our existing program portfolio with free-TV premieres of top U.S. series and crime and sitcom classics, plus fascinating movies. It launched with hits like Modern Family and Nurse Jackie; and we’ll be upping the ante in the upcoming season with programs like Alcatraz, Covert Affairs, Break Out Kings and Raising Hope. The viewers found the new channel more quickly than we expected: after attracting 0.3 per cent of young viewers in its first month, the channel’s ratings have already stabilized at 0.5 percent—that is the fastest launch by a new channel in our market in recent years.
 
WS: As the audience continues to fragment in Germany, what strategies must the RTL family of channels follow to maintain their competitive edge?
SCHÄFERKORDT: “When the market fragments, fragment yourself,” is one of our guidelines. And that is precisely the reason why we launched our three pay-TV channels for different and very narrowly defined target audiences in 2006, and then RTL Nitro not quite six months ago. Viewed over a longer period of 10 to 15 years, all major channels in Germany will lose audience share as digitization progresses. The primary winners are the ‘second-generation’ channels, led by Vox. As the pace of digitization accelerates and following the switch-off of the analogue satellites, digital special-interest channels have mushroomed, especially recently—and here, we are also shaping the market with RTL Nitro. Even if RTL Television has bucked the market trend and grown in the past two years, we won’t be able to stop the natural fragmentation of the market as more and more channels are available. Instead we have two priorities: we want our program and broadcasting brands to have a presence on all platforms, to entertain and inform our viewers whenever and wherever they want. And we want to do this—in the case of RTL Television—with a considerable lead over the competition.
 
WS: Looking to the French market, what factors have contributed to M6 and W9’s continued success?
DE POSCH: Above all, M6 has developed a unique ability to capture the spirit of the times and address viewers accordingly. Nicolas de Tavernost and his team simply have an excellent sense of what viewers want. Just look how M6 has established a major news show, Le 19:45, and the short drama series Scènes de ménages in access prime time—and how this counter-programming is gaining audience share from our competitors. Other popular formats using the same approach include L’Amour est dans le pré, Pékin Express and Un dîner presque parfait.
 
The main channel M6 is complemented by its digital companion, W9, which is the most watched digital terrestrial channel in the key commercial target group. W9 is positioned as a ‘mini-generalist’ channel whose programming covers various genres, including series, movies, magazines such as Enquête d’action, factual-entertainment formats and reality TV shows.
 
This strategy has paid off: in the first six months of 2012, M6 scored an audience share of 17.3 percent and was once again the only major channel to increase its ratings—and this in an environment that’s still marked by on-going audience fragmentation. With the broadcast of live Euro 2012 matches in June, M6 scored its best monthly ratings in four years. The match between Sweden and France attracted 12.2 million viewers—the channel’s second-highest audience ever. As a consequence, the M6 family increased its combined audience share, both in terms of total audience and in the commercial target group.
 
WS: The Spanish market, by comparison, is a much different situation. How is Antena 3 faring given the economic crisis?
DE POSCH: No doubt, Spain is in a difficult economic situation. The country’s TV advertising market fell by an estimated 16.5 percent in the first six months of 2012. In Spain, we are a minority shareholder in Grupo Antena 3, with a 21.7-percent stake in the company.
 
Earlier this year, Antena 3 and La Sexta agreed to merge their TV businesses. Following a ruling of the competition authority CNC in July, which was considered unacceptable by Grupo Antena 3, the decision is now in the hands of the Spanish government. As I said before: the country is facing a difficult economic environment, but it is also a large TV market in Europe with significant recovery potential once the economic crisis is behind [us]—and Spanish people love watching TV as shown by the very high average viewing time of 239 minutes per person and day.
 
WS: RTL Nederland has recently been named company of the year in Holland. What factors have been driving its success?
DE POSCH: One of RTL Nederland’s biggest achievements in recent years was its ability to very successfully position a fleet of four channels under the RTL brand name and to largely monetize their growing audience ratings: in 2011, nearly all growth in the Dutch advertising market went to RTL Nederland.
 
In the first half of 2012, RTL Nederland’s family of channels achieved a combined prime-time audience share of 32.4 percent. That was slightly down year-on-year, mostly because the European football championship was broadcast by the public broadcasters in June. Nevertheless, RTL Nederland increased its lead over its main commercial competitor, SBS Group, to 12.4 percentage points and also remained clearly ahead of the public broadcasters.
 
This is mostly due to great formats such as The Voice Of Holland and Holland’s Got Talent, which captivated millions of Dutch viewers each week. Or take The X Factor: last year, RTL Nederland developed a 360-degree approach to increase audience involvement. It launched an app that enabled viewers to interact with candidates—even to follow their heartbeat while they sang on stage and prepared for their turn. This “heartbeat” feature created a real buzz. Another feature, the “social heartbeat,” showed how many tweets and comments were posted for each candidate. In other words: the second screen has become a crucial addition. In the past, interactivity used to take place through text messages or call-in, today viewers use Facebook and Twitter. Shows like X Factor still create the “coffee-machine buzz,” but today it happens in real time and not the next day.
 
After the finale, RTL Nederland organized the X Factor Experience, a special concert where fans could contact the candidates they knew from the TV screen. This is a perfect example of what RTL Entertainment does in the event space—especially since the acquisition of Wentink Events. RTL Entertainment also organizes events that aren’t at all related to any TV show.
 
To sum it up: RTL Nederland is one of the forerunners in digitization and diversification. Bert Habets and his team have managed to convert RTL Nederland from a TV broadcaster into an all-round media company. Besides the launch of new channels like RTL Telekids, RTL Nederland operates a rapidly growing on-demand platform called RTL XL and a series of popular mobile apps. It also operates online portals like the newly acquired weather site Buienradar and branches out into ventures such as the restaurant reservation tool Couverts.
 
WS: Hungary is suffering from a sluggish economy. What challenges is RTL Klub facing?
DE POSCH: In the first half of 2012, Hungary’s net TV advertising market continued to decline quite significantly. This difficult economic environment—combined with the on-going fragmentation of the highly competitive Hungarian TV market—underlines the rationale behind our acquisition of seven cable channels in 2011 to build a complementary family of channels around RTL Klub. The newly acquired cable channels increased their prime-time audience share by 25.7 percent compared to the first half of 2011 The cable channel RTL 2 will be launched soon, to further grow our shelf space.
 
WS: At FremantleMedia, what are the keys to finding successful formats that can travel?
DE POSCH: FremantleMedia is one of the jewels in our portfolio. At the last international TV market in Cannes, in spring 2012, you could see how highly FremantleMedia is regarded by TV professionals around the world. Tried and tested format brands like Got Talent are very valuable.
But you have to remember that you can’t just copy a format from one country to another, you have to adapt to local customs and behavior. Television and TV production is a highly local business: you have to know your audience, and how to address your viewers. This is what FremantleMedia offers through its global network of production companies.
 
The key to finding successful formats for worldwide travel is to identify formats that can easily overcome these cultural barriers. On the one hand this can be done by relying on a clear set of rules that apply to popular sports such as football or tennis, and to long-running game shows such as The Price Is Right.
 
On the other hand, talent shows such as Got Talent or Idols share a mutual frame of reference. In this case, FremantleMedia won’t need to make them more German or French in their respective markets, because the contestants are German and French. Their dreams and aspirations are universal stories. And these stories can travel.
 
And yet, competition is fierce in the production space; Cécile Frot Coutaz, FremantleMedia’s new CEO, who knows the company inside out, will take FremantleMedia to the next level with her team as they untiringly find and exploit new formats.
 
WS: What trends are you seeing in online viewing?
SCHÄFERKORDT: More and more viewers today expect to be able to watch television wherever and whenever they want, especially when they’ve missed a favorite show. Therefore online views via PC and mobile devices are increasing rapidly. In March this year, we had more than 100 million video views in Germany across all platforms for the first time, up to 20 million were generated by RTLNOW.de as just one member of our NOW-family, as we call our several catch-up TV services.
 
Apart from this ongoing growth, we see that consumption of linear TV remains high on a record level across all relevant target groups. That shows us that online or mobile TV viewing represents an additional use of our content.
 
One future trend will be the option to use our on-demand services via connected-TV devices. Currently this market in Germany is very small, but we are sure it will grow fast in the next years. Just a few weeks ago we signed a first contract with a cable operator to bring back our catch-up services on the big TV screen.
 
The most wanted shows on our catch-up TV services are our daily soaps such as Alles was zählt, our weekly action series Alarm für Cobra 11 and our top shows like Deutschland sucht den Superstar—all of them on RTL Television—as well as our factual-entertainment formats like Goodbye Deutschland on Vox.
 
WS: What has RTL Group learned about monetizing content on digital platforms?
DE POSCH: We are actively pursuing a digitization strategy: our linear free-to-air channels are already available on multiple digital distribution networks: terrestrial, cable, satellite and IPTV. We complement our channels with nonlinear offers such as free catch-up TV, paid on-demand services and apps on TV, tablets and smartphones—in a nutshell: we are available to viewers on all screens. And we’ll do even more in the future. Let’s not forget that top content is the key driver of demand for such devices.
 
RTL Group’s online platforms and on-demand offers across Europe collectively generated more than 1.2 billion video views of professionally produced content in the first half of 2012, that’s up 33 percent year-on-year. Mobile video views were up 92 percent in Germany, and up 99 percent in France. This is a rapidly growing market. And this growing audience demand is also attracting advertisers, as you can see from the high growth rates of online video advertising.
 
But the online market is very crowded and you need scale to operate in such a market; we believe that we have the necessary scale.
We also do see a problem with copyright piracy on the Internet, i.e. when some companies or individuals try to make money with other companies’ content. It is essential that we remain in control of our content and of our advertising sales. Content needs to be nurtured and properly protected by copyrights. A level playing field must be established among all industry players and across all digital distribution platforms.
 
As for our content arm, there are many opportunities in the digital world for FremantleMedia. One way to generate revenues from content online is by micropayments. FremantleMedia’s digital subsidiary, Ludia, has shown how to generate profits from games on Facebook or apps for digital devices such as the iPad. Recently, they launched the Jurassic Park Builder app, which is already proving popular with users.
 
Additionally, The YouTube channel of Britain’s Got Talent has reached over 1 billion video views and is among the top 50 most-watched channels worldwide. In May 2012, FremantleMedia launched its first channel funded by YouTube: The Pet Collective. In July, Radical Media followed with its channel, THNKR, which features new series and programming focused on knowledge, education and ideas that are changing the world. FremantleMedia’s German arm, UFA, is now also planning to launch two YouTube channels.
 
WS: Do you have plans to expand the RTL Group’s pay-TV offerings?
DE POSCH: We currently offer pay-TV channels in Germany, France and the Netherlands. RTL Nederland recently launched a third pay-TV channel called RTL Telekids, which features high-quality children’s entertainment. The RTL Telekids programming window, which was introduced on RTL 8 in October 2010, will remain on air as well. So the new channel can benefit from the cross-promotion between free-to-air and pay-TV.
 
And that is our strategy: if a pay-TV channel complements and enhances our free-to-air portfolio we will definitely look into it and expand our existing portfolio. But we will not become a pay-TV company in the future.
 
WS: Is television still the most efficient way for an advertiser to reach a wide audience?
DE POSCH: Over the past decade, it’s been fashionable for media commentators and business pundits to declare how new technology, and the Internet in particular, is sweeping aside everything that came before it—whether in social networking, retailing, entertaining, or advertising. Yes, times are changing, but all good operators, in all walks of life, are constantly adapting their business models to take advantage of the many opportunities such technology brings. This is certainly true of our TV world.
 
TV is the only medium that can reach mass audiences and connect them emotionally, instantaneously and in large communities to a specific program or a brand. No other medium can do this. The question is, where will TV be heading with the help of new technology?
 
But we are also increasing our presence on the second, third and fourth screens—tablets, PCs, smartphones—by extending new content offers to the viewers, like M6 Replay or RTL Now for catch-up TV. We are also a leading player in the premium segment of online video advertising. We aggregate online unique users and are usually in the top five online display players in the countries in which we operate.
 
WS: What opportunities is IP Network, RTL Group’s advertising-sales arm, offering advertisers on linear channels and online?
DE POSCH: Having worked closely with advertisers and agencies for over 20 years, IP Network can analyze and explain differences and similarities between the various European TV advertising markets and help advertisers who are not so familiar with the European TV scene, or who want a more global approach, to successfully run campaigns outside their homeland. This is not only true for TV or radio advertising, but also online. IP Network’s international sales team and extensive network of European media experts can build a range of custom media solutions designed to meet specific advertising needs and help clients to successfully penetrate their chosen markets.
 
WS: What have been some of the successful strategies of IP Deutschland?
SCHÄFERKORDT: We offer advertisers high reach on high-quality channels. The option of cross-channel bookings makes it easy to reach advertisers’ communication targets. Offering creative solutions adds to the success.
 
Through our research, for example the impact index we established, IP proves the advertising effectiveness of highly involving programs. Our impact index is now used by the independent auditing firm Ebiquity. IP also initiated the combined measurement of video content and advertising on every platform—TV, laptop, tablet, smartphone. The idea is to develop a model for a ‘convergent’ advertising currency.
 
WS: What are some of the advertising restrictions that linear channels in Germany must follow that online does not need to follow?
SCHÄFERKORDT: The main restrictions are the limitation to 20 percent advertising per hour and the comprehensive restrictions on interrupting content like news and children’s programs with commercial breaks. Special advertising formats like single spots are allowed only in exceptional cases. Corresponding restrictions do not exist for audiovisual content on the Internet. Furthermore, on a smart TV, online services can even set themselves on top of our news program by overlaying parts of the screen with their own advertisement. Whereas the European regulation merely limits TV advertising for children, German regulations forbid any and all commercial breaks in children’s programs. All of these differences lead to a competitive imbalance between online and linear media.
 
WS: What changes in regulation are necessary to improve this situation?
SCHÄFERKORDT: To answer this question, we need to take a step back: Is there still a difference between linear and nonlinear audiovisual content that justifies differing levels of regulation? We have to make a decision whether we still want to regard linear TV not only as an economical but also as a cultural asset. The mentioned regulatory differences can only be justified if—and only if—linear TV is still a one-of-a-kind media genre. In this case, the regulatory mandate is not fulfilled by setting more restrictive advertising rules. Rather TV regulation as a whole has to be adapted, and should also reflect the relation between platform operators and content providers. We also need privileged access to infrastructures to fulfill our socio-political responsibility.
 
On the other side, if you consider linear TV as just one of multiple types of media without any necessary privileges, taking into account that users and viewers do not distinguish between linear and nonlinear content anymore, then of course the stronger advertising rules can no longer be justified. In this case we need in fact a deregulation of linear TV to establish a real level playing field between all media types.