Exclusive Interview: RTL’s Anke Schäferkordt

ADVERTISEMENT

PREMIUM: Anke Schäferkordt, co-CEO of RTL Group, outlines the ways the company is serving advertisers and viewers in today’s multichannel, multiscreen world.

TV EUROPE: This year marks the 30th anniversary of RTL Television. What did RTL offer viewers that they couldn’t get from the public broadcasters ARD or ZDF?
SCHÄFERKORDT: RTL Television—or RTL Plus as the channel was called at its launch in January 1984—revived the German TV landscape. Since its beginnings, RTL Television has always been an innovation leader in all genres: we showed live transmissions of Formula One races as early as 1984; we were the first German channel to start broadcasting a morning show in 1987; we introduced daily series to German viewers with Gute Zeiten, schlechte Zeiten in 1992. The daily series has been on air ever since, and celebrated its 5,555th episode this year. Boxing became big with RTL Television—first with Henry Maske, later with the Klitschko brothers. In 1999, RTL Television launched Wer wird Millionär?, reviving the quiz/game show genre. And in 2002, we introduced Deutschland sucht den Superstar, the German version of Idols. With shows such as Tutti Frutti or Ich bin ein Star—Holt mich hier raus!, RTL Television has always been a bit cheeky, and has dared to go ahead with more unconventional programs than the public broadcasters. If you take a look at the latter’s programming, you can clearly see that they regularly try to copy our formats.

TV EUROPE: How were RTL’s newscasts different and what audience segment did they target?
SCHÄFERKORDT: In news, our goal has always been to focus on our viewers’ needs and explain how certain developments affect their daily lives. We try to explain events and correlations in an easy way without being misleading. We call this philosophy “news to use.” The target group for our flagship news show RTL Aktuell is the same as for our channel flagship RTL Television: viewers aged 14 to 59. For 18 years now, RTL Aktuell has been the clear number one in this target group. For example, our coverage of the 9/11 attacks in 2001 were highly acclaimed—RTL Television was the first German channel to suspend its regular programming for breaking news, then continued the live coverage for several hours. Anchorman Peter Kloeppel later received several awards for the live coverage.

TV EUROPE: Today, what are RTL Television’s main strengths?
SCHÄFERKORDT: RTL Television has been the clear market leader in the commercial target group for 21 consecutive years. The channel offers a well-balanced programming grid consisting of entertainment, news, fiction and [magazine] shows; 87 percent of RTL Television’s grid is locally produced and almost 30 percent is produced in-house. On a given weekday, more than five hours of in-house news and magazines form the backbone of our programming. This unmatched know-how across all genres enables us to react quickly to changes in TV consumption habits.

Our daily magazines give us unique promotion power to establish new formats by creating a buzz for them. This also enables us to keep viewers on our channel, enhancing the so-called audience flow.

To sum it up: RTL Television’s leadership is not based on a few isolated “over-performers.” Neither are our ratings built only on output deals or sports rights. RTL Television has a solid structural leadership across most slots and throughout the whole week, based on a variety of genres.

TV EUROPE: Since its launch, what impact has RTL Television, as an advertising vehicle, had on the German businesses and the economy at the time?
SCHÄFERKORDT: Our flagship channel RTL Television covers demographics associated with high TV consumption and high ad expenditure. The most important impact from the launch of commercial TV in Germany was that advertisers finally were able to reach the audiences they wanted. Previously, demand was much higher than the airtime actually available for commercials. Television is the only medium to reach a mass audience within a short period of time and this will not change in the foreseeable future. Today, more than 90 percent of the highest-reach commercial breaks in all of German television are on RTL and Vox.

TV EUROPE: And today, what is the state of television advertising in Germany? How does the advertising market in Germany compare to the other markets where the RTL Group is present?
SCHÄFERKORDT: First of all, we operate in a robust environment in Germany—regarding both developments in the advertising market, and the underlying macro-economic trends. In this environment the German advertising market has increased slightly over the past years with TV proving highly resilient.

The Internet continues to expand its share of total advertising spend, mainly at the expense of print media. However, TV is still under-represented in Germany in terms of advertising market share when compared to its usage. And print represents a significantly higher share of the German advertising market in comparison to many other European countries. Looking across Europe and even into the United States, you can see there is significant potential for TV to grow its share of the total advertising market—especially in Germany.

TV EUROPE: How did the concept of the RTL’s family of channels come about?
SCHÄFERKORDT: The rationale behind the family-of-channels approach is simple. Firstly, high audience shares will continue to form the basis of our success. Secondly, it is clearly the best response to increasing audience fragmentation in a digital, multichannel world. Or as we say: “Fragment yourself before someone else does.”

TV EUROPE: How is RTL Mediengruppe’s family of channels serving viewers today? Does each channel serve a different segment of the audience?
SCHÄFERKORDT: Yes, exactly. Let me briefly elaborate on the complementary positioning of our various channels, which cover all relevant commercial demographics. RTL Television is our flagship channel in Germany; as described before, it’s a classic general-interest channel. Vox has continually grown its ratings over the past years. It relies on quality entertainment to target female viewers and has a commercially attractive upmarket viewership. RTL II is a young and powerful, slightly more male-skewed channel. Super RTL is the market leader in children’s demographics. N-TV, our news channel, is the benchmark within the German news landscape, and RTL Nitro targets male audiences and is the number one newcomer—it rounds out our portfolio. This year, we launched a fourth pay-TV channel, Geo TV, which shows high-quality documentaries, to complement our existing portfolio consisting of RTL Crime, RTL Living and Passion.

TV EUROPE: What role does imported programming play on the various channels?
SCHÄFERKORDT: In the case of our big flagship channels like RTL Television in Germany and M6 in France, we’ve developed a certain degree of independence with locally commissioned productions—in-house and with partners, as I said earlier. Yes, U.S. series are an important part of our programming, but they are not the foremost or only component. We have our own strong fictional productions in Germany, and the relative importance and audience shares of the U.S. series have actually fallen a little in recent years. This is because of two factors: firstly, many of the highly acclaimed series are high-quality series and best-in-class television, but are made for niche audiences and thus do not attract a large number of viewers on a big free-to-air channel. Secondly, German viewers still love procedurals and at the moment there are not a lot of those on the market.

TV EUROPE: How has the family-of-channels strategy been working in other countries where RTL is present?
SCHÄFERKORDT: Fragmentation continues across all markets. We have built our families of channels across Europe with complementary positioning and shared know-how. This has enabled us to grow share and strengthen our market position despite the increase in numbers of channels across the market. We increased audience share by more than three percentage points in Germany, France and the Netherlands over the past ten years.

TV EUROPE: How have you been diversifying revenues in Germany and in other countries?
SCHÄFERKORDT: In total, RTL Group has the highest percentage of non-TV advertising revenue, and is also the most geographically spread group when compared to our competitors. We generate 43 percent of our revenue from non-TV advertising sources. Our content-production arm, FremantleMedia, accounts for 26 percent. There are further opportunities around digital pay TV and HD to drive up re-transmission fees from platform operators. Additionally, we are actively working on investing in diversification businesses—for example through RTL Ventures in the Netherlands—and use our strong broadcast brands to promote these.

TV EUROPE: How have you been serving viewers on screens and devices other than the traditional TV set?
SCHÄFERKORDT: TV remains the most powerful media platform and nonlinear consumption has not changed this. Nowadays, we know that our viewers expect to watch whatever they want, wherever and whenever they want. That’s why we continue to broaden and deepen our on-demand offerings serving all screens: TV sets, PCs, tablets and smartphones. As long ago as 2007, we started building catch-up services around our family of channels with the start of RTL Now. Today, each of the six of Mediengruppe RTL Deutschland’s free-to-air channels have their own “Now” service. RTL Now generates as many as 37 million video views per month.

TV EUROPE: Across the countries where the RTL Group operates stations, how much is catch-up, VOD or online viewing increasing?
SCHÄFERKORDT: We expect that nonlinear viewing will make up some 15 percent of total video consumption in our core markets by 2018. Each year we see substantial growth rates in video views. In the first half of 2014, RTL Group achieved a combined 15.7 billion video views. I am confident that by the end of this year we will have reached a threshold of 40 billion video views. We are the only European broadcaster with a leading multichannel network presence on YouTube.

TV EUROPE: What has been the RTL Group’s digital strategy?
SCHÄFERKORDT: Online video is at the heart of RTL Group’s digital strategy. We aim to have a strong presence in all segments of online video. First of all, we are constantly expanding our advertising-funded catch-up TV services to make them available on all devices. In addition, we’ve started to create original or native content for digital platforms such as Style Haul in the U.S., Golden Moustache in France, and Munchies, a joint venture of FremantleMedia with Vice. For the future, it is important that we expand our production capabilities and learn how to spend far less producing for the web. And finally, RTL Group aims for a strong short-form video presence via our own platforms or our multichannel networks, like BroadbandTV.

More than 80 percent of our 2.4 billion monthly video views are already outside our core broadcasting territories and we expect substantial further growth. We want to be where our audiences are, that’s why we want to be a leader in online video. And we know that advertising budgets will follow the eyeballs. Today, billions of video views only translate into millions of advertising dollars, but online video advertising is on the rise.

That’s why we also made a structural move to improve digital monetization and to enhance our skills by adding data- and technology-based competencies. The acquisition of SpotXchange represents a cornerstone investment opportunity in this area. SpotXchange technology will strengthen and expand RTL Group’s ability to retain control of inventory, revenue streams and advertiser relationships, also reducing dependency on third-party providers. In other words: the acquisition brings technology and margins in-house.

TV EUROPE: LOVEFiLM is already present in Germany, so is Vivendi’s Watchever and Netflix is launching in Germany and in other countries. What kind of disruption can these OTT services bring, not only in attracting viewers, but also in acquiring rights to movies and TV series?
SCHÄFERKORDT: You are absolutely right, there are already some subscription-based video-on-demand offerings on the German market, but none of them is large enough to give the underlying business model a solid footing. The idea here is not just to be able to offer the audience such a service, but to do so with a sustainable business model. So far none of the existing players have managed to attain a truly relevant size that is comparable with what Netflix has achieved in the U.S.—despite massive advertising campaigns in some cases.

Nonlinear TV services have clearly increased the complexity of the TV business: you can watch programs for free, financed by advertising. You can pay per view for a single episode or buy a season pass. Or you can pay a monthly subscription fee to get an “all you can watch” TV menu. In four key European countries—Germany, the U.K., France and the Netherlands—subscription-based VOD revenues grew by 108 percent in 2013 alone. The consequence: if possible, we have to secure as many rights as possible to exploit content across all platforms and services.

The even bigger challenge is to establish and develop the right business models, so that in the future it really won’t make a difference, in financial terms, what devices and services viewers watch our content on. To achieve this, we also have to add a new skillset to our group: technology. We are great at producing content, at scheduling and selling TV commercials, but state-of-the-art technology is a key driver for our digital businesses, from online advertising sales to audience measurement and video recommendations. And this is what we did with the recent acquisition of SpotXchange in the advertising space.

TV EUROPE: Looking ahead 12 to 24 months, in what areas do you see growth for RTL Germany and for the RTL Group?
SCHÄFERKORDT: We see growth opportunities across all three pillars of the RTL Group: broadcast, content and digital. We’ve already talked about digital and the underlying growth rates. In broadcasting, whether in Germany or across our footprint, we’ve said that it’s our goal to optimize and develop our existing broadcasting business. We will always invest in top content, to secure and enhance our leading channel brands. We’re also focused on growing the new channels we have launched in Europe and in the high-growth Asian markets. Finally, we aim to further grow the “second revenue stream” from platform operators, created by the strength of our brands.

For content, as with our broadcasting business, the first priority is always to maintain our core business. Our job is to keep favorite formats such as Idols and Got Talent big and fresh while simultaneously keeping an eye on new viewing habits and investing in new formats. We believe very strongly in the future of the production business and see global growth opportunities for FremantleMedia, both organically and through acquisitions—because attractive content will continue to be crucial in the future. The constantly growing number of digital distribution platforms is increasing demand for top content.