Exclusive Interview: MTG’s Jørgen Madsen Lindemann

PREMIUM: Jørgen Madsen Lindemann, the president and CEO of Modern Times Group, talks about how compelling storytelling is the fuel that drives his businesses.

WS: MTG has recently acquired a 92.4-percent stake in DRG and a 51-percent stake in NovemberFilm. What motivated these acquisitions?
MADSEN LINDEMANN: It is important for us to have a constant focus on securing key high-quality content for all our markets. We love good stories. We love giving relevant content to our customers. We see a lot of content in the market but we want to make sure that we find companies that can produce and tell good stories for our linear channels, for our pay-TV viewers and for our online customers. So that was the rationale for acquiring stakes in DRG and NovemberFilm.

NovemberFilm is an exciting company and has a very experienced team. They are producing different genres from what Strix is doing in Norway. DRG is a fantastic program- and format-sourcing company, which will help us with all our markets. We are now present in 10 free-TV markets and are launching in Tanzania as well towards the end of this year. We have been present in Ghana since 2008, so we need good stories for a wide range of markets. And we are constantly on the watch for these companies, so it’s not ending here, we would like to work with a lot of other content companies around Europe.

WS: Do DRG, NovemberFilm, Strix and Paprika Latino all complement each other and cater to different audiences?
MADSEN LINDEMANN: Yes, and they also cater to different markets. Paprika is well established in Eastern Europe, where we have a strong presence. Strix is to a large extent focused on the Nordic markets. And Modern Africa Productions, our African production company that we started in 2010, is needed for our African expansion. They serve the markets that we are in and they also deal with a lot of different broadcasters. They also serve companies that compete with our free-TV channels, that is how we decided to set up the business. We want to make sure that our content companies are relevant and that they can tell good stories to a wide range of channels in different countries.

WS: You mentioned Tanzania. What opportunities does MTG see in Africa?
MADSEN LINDEMANN: It is a key strategic market for us. Several of the sub-Saharan countries are projected to have the fastest-growing economies in the world in coming years. Right now we are present in Ghana with our free TV channel Viasat 1. In the second quarter they managed to turn a profit for the first time since we launched the business. We grew 44 percent on sales, which is fantastic. We also broadcast our pay-TV channels in five different countries in Africa. We are looking at more opportunities in Africa. Tanzania is next in line. We have licenses now and we will be launching either late this year or beginning of next year. We are also exploring opportunities in some of the other African countries. We are looking at everything: production companies, channel licenses, online businesses, and so forth.

WS: Tell us about MTGx, the group’s initiative to accelerate digital growth and innovation. Why was this important and what does it entail?
MADSEN LINDEMANN: It was very important for us to reach new target groups and more people with our content and now there is the possibility to do that through online as well. First of all, we have our existing formats and we have made sure that the formats we have on our linear free-TV channels are, to a large extent, converted so that they have an online component. It keeps viewer interest in the program alive throughout the week, in between episodes, and hopefully creates even more interest when the program is aired again.

We have a wide range of extraordinary content that is only available online. To give you an example, in Denmark, during the second quarter, we had more online viewing than we had during all of 2012. That is why MTGx was set up, because we want to make sure that we also create dedicated content for the online world, as well as explore other growth possibilities in the digital environment.

A part of MTGx is called MTGx Creations, and focuses on development of online content. At the same time Strix, Paprika and MAP also produce content for online. It is a way for us to reach out to many more customers than we are with our free-TV or pay-TV channels.

WS: In Scandinavia, are you beginning to see competition from the likes of Netflix and other over-the-top services, or are your services still holding their viewers?
MADSEN LINDEMANN: We were first to market with our online pay-TV service Viaplay in 2011, and we began to see the competition in late 2012. It is very crowded right now with OTT services in the Nordic region because of the high broadband penetration in these countries. Netflix has entered the market. HBO has entered as well, but we have managed to make long-term contracts with our partners at the different studios. The content we are showing in the Nordic markets is superior to our competition’s offering thanks to the content we are getting from our partners. On top of that, we have our sports, which none of the other OTT services have, and we have our own produced content as well, meaning that our programming that airs on our linear channels is also available online. So it is quite a superior product but no doubt, it is fierce competition that we are facing. On the other hand, online offers us the possibility to reach out to customers that we couldn’t attract in the old days because there is a fixed amount of cable companies and a fixed amount of people who have satellite, but now with broadband penetration we have opportunities to go out and attract more customers who use broadband as a secondary TV. So we don’t see it as cord cutting, we see it as complementary, which is good news for us.

WS: Is online viewing complementary to the linear viewing or are you beginning to see online threaten the viability of linear channels?
MADSEN LINDEMANN: Right now we are looking at the U.S. to see the viewing behavior there. In the first quarter, according to Nielsen, there was an increase of television viewing. People spent more time in front of linear TV than they did during the same quarter in 2012. On top of that you have the online viewing, which is incremental. We believe that long term, linear channels will be there, no doubt about that. But we also see that a lot of the younger audiences like the way we are serving content online; that is what they are embracing. That is why we see it as incremental.

WS: And are you seeing advertisers willing to go online?
MADSEN LINDEMANN: Yes, we do and they are paying a higher price for viewers online than they pay on TV, because it is more targeted as well. So it is helping us.

WS: How have your businesses in the emerging markets been performing?
MADSEN LINDEMANN: Latvia in the Baltics is a large market and we   acquired a big TV company called LNT about a year and a half ago. We have a strong presence with a wide range of channels. Lithuania is also doing very well with our multichannel strategy. The same goes for Estonia, where we’ve had good growth on our main channel. Our combined share of viewing now in the Baltics for us is around 48 percent. Moving on to Bulgaria, we managed to find good programming and execute it well in different formats, we have a 32.5-percent viewing share. That is 7 percentage points higher than 2012, which is very fine growth as well.

WS: In the Czech Republic you also recently had particularly strong growth.
MADSEN LINDEMANN: We managed to grow 47 percent in the second quarter. Unfortunately that is probably a one off; that is not going to happen again! The most important thing is that we launched a new channel called Zoom, so we have four channels in the Czech Republic and have a very strong media offering. That has also helped our online development. We would like to do more in the emerging markets. We would like to launch more channels. We are looking at production companies, at more TV channels and online businesses as well.

WS: How is CTC in Russia doing?
MADSEN LINDEMANN: It is doing well. Russia is a very interesting market. This may be a childish description but it’s like being in a candy shop! Digitalization is happening right now, the analogue world is changing to a digital world; there will be about 70 million digital households in 2017. You will see more channels coming in to the Russian market and this is always good news for content producers.

If you look at the advertising market, Russia is forecast to be the biggest TV advertising market in Europe in 2014, bigger than Germany and bigger than the U.K., which is quite impressive. In the online world, the growth rates are around 25 percent, so it is really a very interesting market for us; it’s booming. Right now we have three channels in Russia: CTC, the main channel, Domashny, which is a successful female-skewing channel, and we have Peretz, which is a comedy channel targeting younger male viewers. There are a lot of opportunities in Russia; it is a big country. We are very happy to have 38 percent of the biggest private media group there.

WS: And the Nordic region continues to perform well?
MADSEN LINDEMANN: Fortunately we have had growth in all our markets. We are growing the viewing in Norway, Denmark and in Sweden as well, which is very important for us. Still, there are things to be done with all of our channels. We want to make sure that we select the right formats that can offer viewers interesting stories because there is a lot of content out there and our mission is to offer the right content and the most relevant content.

WS: As you look across your portfolio, where do you see growth—launching channels in the countries where you are already present or also expanding into new territories?
MADSEN LINDEMANN: Both. We are launching a new channel in Norway in the second half of the year. We launched a new channel in Czech. At the same time we are looking at new countries. We would like to expand our business model into more countries, particularly in Eastern Europe and in Africa; those are the areas where we would like to grow our businesses.

WS: As competition increases from outside companies, the power of your brands must be all the more important, because people know what they get from Viasat.
MADSEN LINDEMANN: Yes, it’s the power of the brands but what is also important is the cooperation we have with the Hollywood studios. We want to make sure that we have very strong content from our partners. This is in the end, still what drives it, you can have as much content as you want, but if you don’t have the right content, which we have seen with some of the other services who are starting up and then exiting the market because they simply found out that their content offering was not attractive enough.

WS: So you are confident, looking forward, that the television business is still a good business to be in?
MADSEN LINDEMANN: It is, luckily! And last year we decided to invest a lot in our pay-TV businesses in Russia. We have around 90 million subscribers now in Eastern Europe with our thematic channels. We also invested in our premium movie channel in Russia on the back of the digitalization that is taking place right now.

WS: Tell us about MTG Responsibility.
MADSEN LINDEMANN: Because our business is growing so fast it is very important that we have and communicate a culture of corporate responsibility. We have different kinds: one is to conduct our business in an ethical way—that is very important for us in the markets that we go into. We have a broadcast responsibility as well, we are aware of the impact of entertainment and we offer parental guidelines. We are in 36 countries now, so it is very important for us to have responsibility towards all our employees. And finally, we have a responsibility towards the community we serve and make sure we give something back.

In addition, we are part of a fantastic foundation called Reach for Change. It supports entrepreneurs that aim to make the world better for children worldwide and it has a lot of great local initiatives, as well.

One example is in Ghana where we have a social entrepreneur who has a bike, some books and a tent. He goes around to different cities in Ghana. He pitches his tent and reads stories to children. He leaves some of the books with the children and then moves on to another city and does the same thing. He has expanded his business so more and more young people are having stories read to them in Ghana, which is fantastic.

This is not only happening in Africa. In Sweden, we have a man who helps young people who are not so strong in math. Now we have 300 volunteers in different parts of Sweden helping students who have trouble with math. They worked with 120,000 young people in 2012. This initiative is very encouraging for us, and we want to encourage people who want to make a difference and have passion for what they do. I am very passionate about it. I like the story; I must admit it is amazing what they have done.

We also have a football tournament for young people called United for Peace. The finals are held in Norway in collaboration with the Norwegian Red Cross and the Nobel Peace Prize. It’s a big tournament where young kids—who might not otherwise have had the chance to travel—learn about peace and have the chance to play football.