Exclusive Interview: Tele München Group’s Herbert Kloiber

PREMIUM: Herbert Kloiber, the chairman and shareholder in Tele München Group (TMG) who is being honored with a Brandon Tartikoff Legacy Award at NATPE this year, talks to World Screen about his company—past, present and future—and the value he places on relationships.

WS: Are you looking to expand TMG’s distribution catalogue?
KLOIBER: Yes, we have several segments to it. One is the feature-film catalogue. It consists mainly of features for which we have worldwide distribution, such as Tomb Raider, Wonder Boys or The Jackal. Then we have a slate of documentaries and television drama and all our classic music productions. We will continue to participate in projects like Flashpoint, the CBS network series, and buy international distribution rights or split rights with partners that could retain parts of the world whilst we do the rest. We definitely want to keep growing this fairly new part of our business.

WS: Tele München has been producing a number of high-quality TV movies and mini-series.
KLOIBER: We have been active in that field for 35 years. Recently we’ve done Moby Dick. We are about to launch a big Richard the Lionheart two-part mini-series. We have done quite a few in co-finance mode: Neverland and Treasure Island with RHI Entertainment, which [has rebranded] itself as Sonar. We’ve also co-financed Flood and Ice, big U.K.-based mini-series. We have generated two or three of those a year and we try to place them in the international market, which is where NATPE comes in, because there you can communicate with a big number of participants in the global market at a very good time of the year.

WS: Where does your passion for classical music come from? Did your parents put you at the piano when you were a child?
KLOIBER: My parents never tried to put me at the piano but they stuck me in an opera box at the age of 7 and I was quickly removed for being too noisy for the following ten years! But nevertheless I had a conductor as my godfather, Herbert von Karajan, who was for many years one of the big promoters of putting classic music on film. When I was 22, my first job with Leo Kirch involved the partnership he had with von Karajan making these films, and later I worked hard in my own company, Clasart, to produce with Vladimir Horowitz, Arthur Rubinstein and Mstislav Rostropovich. My first five years in business were nearly all to do with producing these concerts on film. My proudest moment was in September of 1978, when we did the live broadcast of Vladimir Horowitz for NBC, which was broadcast to Europe. Horowitz only played on Sunday afternoons at 4 p.m., which allowed the BBC, ZDF, RAI and the French network Antenne 2 to air the concert at 10 p.m. In those days people were really proud of having a stereo signal live from New York and it was an extraordinary moment, for which we were rewarded with five Emmys.

That was what I did initially, until 1977, when I bought Tele München. Then on came the [expansion into fiction], because Tele München controlled the copyright of the Jack London estate and we produced quite a few of the Jack London novels, until that drifted into the public domain. We continued with family entertainment, action-adventure series like Kidnapped, from Robert Louis Stevenson, and in the early ’80s I started our theatrical distribution company, called Concorde. In November, we released our 500th feature film in cinemas, which was The Twilight Saga: Breaking Dawn—Part 2.

WS: As digital media are changing viewing habits and business models, what are the priorities for an independent company like TMG?
KLOIBER: To have very, very well organized departments in legal and contractual, in delivery and accounting, because it’s lots and lots of volume for very modest individual monetary return. In other words, if you license 2,000 features to a VOD platform, you’ve got to do the metadata and the delivery and the contracts and the accounting for each title for cents and pennies, sometimes with guarantees, sometimes without. But you’ve got 50 of these contracts flying around to do $200 million of volume, whereas in the old days you’d conclude four contracts [with] four broadcasters and you were done. To have the capacity to refuel and replenish the library with all rights deals that comprise all these forms of exploitation, you’ve also got to be able to be very, very clearly ahead of the game—otherwise you could make a deal now and get very hurt a little later.

WS: What have been your and your company’s major contributions to the television industry in Germany and in Europe?
KLOIBER: In the early days of Tele München we were really the first big promoters of the five- or six-country co-financed drama series. We were also fairly ahead of the game in selling these big mini-series, like Graham Greene’s The Heart of the Matter or Stendhal’s La Chartreuse de Parme, shot in English, to the U.S., particularly to PBS, which in those days had both Mobil and Exxon as lead underwriters—one did Masterpiece Theatre, the other had Great Performances. As a small, independent Munich-based drama production company we were able to get RAI and ORTF and ORF and ZDF and Channel 4 and maybe a Spanish network and sell to the U.S., which is a little bit what Jan Mojto [the managing director of EOS] does now, but in the ’70s it was pioneering. It was pre-cell phones and faxes. You were sending telexes to get an answer. In fact, I believe you got faster answers then than you do now.

We were also very, very early in the home-video distribution business. In 1980, when I bought the German subsidiary of Vestron, which was a U.S.-based company that had produced Dirty Dancing, we had more than 40 people servicing the video stores of the day. We were also the first ones to collapse the sales force of our rental division and go fairly full-tilt into sell-through. We were also the ones who brought out the first DVD in Germany, virtually the number one, Terry Gilliam’s Twelve Monkeys, which we co-produced with Chuck Roven of The Dark Knight Rises and many more blockbusters.

We’ve always been ahead in some of the new developments. We were one of the first companies that invested in a corporate structure to develop video on demand, which up until October my son was working for. On Demand Deutschland, of which we own a 50-percent stake, was the first to do library and first-run deals with KDG, KBW and Telekom Austria. We pioneered a lot of that and also learned a lot from it. We learned all the lessons that you need to know, including that some businesses won’t really make it. We have a big lab in Germany that still employs 400 people. We are currently [transitioning it] from the old world into the digital post-production world, which is a formidable task for a company that made $80 million of celluloid release prints. So we are coming up with new ideas for a completely new business plan.

Finally, Tele München was literally, as an independent content company, the pioneer of commercial television. Certainly in Austria to this day, we are the number one commercial broadcaster with two channels, ATV 1 and ATV 2. We were also, at the end of 1985, a major shareholder in Sat.1, which was the first German commercial network—in those days, RTL was still beaming its signal from Luxembourg and the CLT offspring was considered a non-German entity. But along with eight other publishers in Germany, we were shareholders in Sat.1 from January 1, 1986. When the first signal was broadcast, it was one of our programs that aired.

Later we left that consortium and built Tele 5, the joint venture with Berlusconi. We kept our hand very, very early in the development of these commercial networks, including RTL II, tm3 and the “new” Tele 5.

In 1987, I sold half of Tele München to Cap Cities/ABC and after that followed the ten years, what I call the golden period of my corporate life. One, because [I was] at the age when everything is easy and fun, and two, we had this wonderful group of people in New York—Tom Murphy, Dan Burke, Herb Granath, Mike Mallardi and Ron Doerfler—who invited me every year to come to Phoenix to their annual corporate retreat. That was from 1987 to 1996. Ninety-six was the year Michael Eisner bought Cap Cities/ABC, which was the end of what I call my golden decade.

WS: And since then?
KLOIBER: Since then I’ve had what I call my second marriages, not personally. With EM.TV there was a nice day in late 1999 when that $500-million handshake took place, but EM.TV was unable to stay the course that they had mapped out. They bought The Jim Henson Company and Formula 1 and all sorts of other crazy things, and clearly made it necessary for me to buy my shares back before things became a little too rough. Ever since then, “corporately” I have [had no partnerships nor any shareholders.]

WS: Besides having top-quality content, which is essential in this business, what does an indie need to succeed these days?
KLOIBER: I am still old school and parochial about the quality of management, and a lot of it depends on long-established contacts in and outside the company. I have been in business with Harry Sloan and Jon Feltheimer and Leslie Moonves for long enough. I’ve served on Ronald Lauder’s CME board and the SBS board. One day Harry gets to be the CEO of MGM, and the next thing you know, we’ve made a very substantial deal with MGM and we now, many years later, have the TV rights for The Hobbit and Skyfall in Germany. These top executives reoccur in your life in many and new facets. I recently read that Harry Sloan and Jeff Sagansky have bought one of the big in-flight entertainment businesses—a company that delivers feature films and content to airlines. I sent them a Hail Mary and they sent back, “We’re coming to NATPE,” and we will sit down with them. For more than 25 years we have been the representatives of CBS in Germany. The deal goes back to the days of Larry Tisch’s control and to the days when Rainer Siek was there. We’ve renewed the arrangement more than 14 times, and even though Armando [Nuñez, the president and CEO of CBS Global Distribution Group] now has a big operation in Germany, we still work on a very day-to-day basis with CBS product in our market.

That is something that is important to know: as much screaming and yelling that goes on in this business, it’s always nice to know you’ve got people around the globe that see things a little bit like you do, and that you can pick up the phone and say, What do you think of this idea?

WS: Does the new generation value relationships as much as you did?
KLOIBER: I think they will learn to do that as they become older and mature and less obsessed with answering 2,000 e-mails every day, like Mr. Petraeus!

A big obstacle has become this: “I’ve got to be everywhere at the same time and answer every e-mail every second.” I still don’t do e-mail. [It’s not that I don’t work much,] but I do know when it’s 6:30 p.m. and I’m ready to go. Then I’ll make a call or two late at night to California to see what’s going on. I am not obsessed with this communicating with everyone all the time and having to get the answer in 22 seconds. That gives you a little more time—not to sit and strategize and listen to opinions of 250 people—because if you want to succeed you have to have a fair amount of self-assurance in making a decision. You’ve got to say, Let’s roll, let’s do it. When we backed Charlie Sheen’s comeback in Anger Management, the deal was, we’re going to do 10 episodes and if they work we’re doing another 90. That’s formidable. That’s $20 million or more and all you can say is, I believe in it and in him. I think it’s going to work. Do we know? No. Many people would tell you, “Don’t touch it; he’s dead.” And other people will say, “No, no, no, you’ve got to do it.” At the end of the day, you’re all alone and you’ve got to say, we’re going to do it. Otherwise someone else will do it [instead of] you.

WS: So the good old gut element still counts?
KLOIBER: It’s very important. You’ve got to step up to the plate and say, Yes. What’s even harder is to say no.

WS: Many people are claiming that linear channels may lose their relevance, as more viewers watch programming on demand. Do you think free TV is still a good business?
KLOIBER: Yes. We are confident [of] that, at least in those markets where we are currently invested, mainly in the German-speaking world, where advertising revenue, since the 2008 recession, has not eroded or in any way collapsed as it did in Central and Eastern Europe. I remember when we were at CME I heard nothing but, “This is a 70-percent per-annum growth market and it’s the only place we are going to invest in.” Now it’s a minus-70-percent market and Germany is still up 4 percent per annum, which may be boring, but given the demographic development in this part of the world—there are 100 million Germans who soon will all be over 65, and birth rates are terribly low—advertisers still invest in free TV and there is still reasonable growth. If I were a public company’s manager having to deliver 15 percent ROI, I’d probably get out of it. [In my position,] I’m very comfortable knowing the mechanics of what I’m playing with. I know how to turn the cold and hot water on, depending on what the market, quarter by quarter, is telling me.

WS: You are receiving the Brandon Tartikoff Legacy Award. What does that mean to you?
KLOIBER: It’s a big, big deal for me because I owe a huge part of my career and certainly most of the fun of my corporate life to the United States’ television industry. I remember meeting Brandon on one occasion at NATPE when he was giving a good talk. And for our industry to recognize someone out there and give him a very, very prestigious award, I am totally thrilled. When Rod Perth said they had selected me as the second European to receive such an award, I said, I’ll be there two weeks ahead of time!