RTL Group’s Anke Schäferkordt & Guillaume de Posch

RTLThe RTL Group is one of Europe’s leading media companies, with activities in three main business areas: broadcast, content and digital. The first is comprised of ownership stakes in 57 TV channels—including RTL Television in Germany, M6 in France, RTL 4 in the Netherlands and Antena 3 in Spain—and 31 radio stations across Europe, along with a joint venture that manages channels in Southeast Asia with CBS Studios International. The content division is made up of FremantleMedia, one of the world’s largest independent producers and distributors of programming. Its slate includes megabrands like Got Talent and The X Factor, the dramas Deutschland 83 and Wentworth, kids’ shows like Danger Mouse and lifestyle series featuring Nigella Lawson and Jamie Oliver. The Digital Hub manages a varied group of companies that specialize in multiplatform networks and short-form video.

The group originally built its success around its family-of-channels strategy. In each country where it operates, it has anchored its broadcast offerings with one leading general-entertainment channel and surrounded it with numerous additional channels targeting specific genres or audiences. This formula started in Germany and then was replicated successfully in the other RTL countries: France, Belgium, the Netherlands, Luxembourg, Spain, Hungary and Croatia.

Since 2012, Anke Schäferkordt and Guillaume de Posch have been co-CEOs of the RTL Group. Schäferkordt began her career at Bertelsmann, today the group’s parent company, and has been with RTL since 1991. In addition to being co-CEO of the group, she is CEO of Mediengruppe RTL Deutschland, which encompasses all the German businesses and is the engine that drives most of the group’s revenues. Before joining the RTL Group in 2012, de Posch held positions at several leading European media companies, including CLT, the pay-TV company TPS and ProSiebenSat.1 Media. Along with his role as co-CEO, he is responsible for the group’s operations outside Germany and for FremantleMedia.

Both Schäferkordt and de Posch have been carefully following changes in viewing habits and consumers’ consumption of content. As they expand the group’s bouquet of linear channels with services that cater to special viewing groups and interests, they have also been building the Digital Hub and making sure FremantleMedia expands its portfolio of programming. At the same time, they have been paying attention to advertisers’ evolving needs on both linear and nonlinear platforms. Together they talk to World Screen about opportunities in Germany and beyond in all three of the group’s core business areas.

WS: Mediengruppe RTL Deutschland has been one of the drivers of the group’s revenues. What has been contributing to its growth?
SCHÄFERKORDT: Well, the German advertising market remained the healthiest in our portfolio, with the German net TV advertising market up by between 2 and 3 percent in 2015. At Mediengruppe RTL Deutschland, we outperformed the overall TV advertising market and also generated higher revenue from diversification such as online couponing and platform revenue. As a result, Mediengruppe RTL Deutschland grew both revenue and operating profit significantly in 2015, reaching record levels.

WS: How is the family-of-channels strategy continuing to deliver positive results in Germany and other territories?
SCHÄFERKORDT: Fragmentation con­tinues to change our industry, and the pace of this change is increasing. Countless new niche channels are emerging, for ever-smaller target groups, and we have a clear strategy for this—we were the first to develop the family-of-channels concept for Europe, and we continue to lead the market.

We’ve launched more TV channels in the past four years than ever before. In Germany, RTL NITRO, which we launched in 2012, continued to increase its audience share throughout 2015, and we’re confident we can grow the channel even further.
DE POSCH: It’s a similar picture in France, where Groupe M6 launched 6ter, its third free-to-air channel, at the end of 2012. With strong audience growth, 6ter has helped increase Groupe M6’s combined audience share in 2015.

Another example is RTL Z, RTL Nederland’s fifth free-to-air channel, which launched recently. RTL Z was previously a program block on the men’s channel RTL 7. Now it [has been] spun off into a new standalone channel, with a target group that TV in the country hadn’t really targeted before—business people, the go-getters. Business, politics and breaking news all feature heavily, but we also include technology, innovation, lifestyle and personal finance. The overall aim is to highlight interesting ideas and business opportunities. RTL Z, and also GEO Television—a high-quality pay-TV documentary channel in Germany—show the RTL Group’s commitment to independent news and information programs.

WS: What has been the strategy behind RTL’s Digital Hub?
SCHÄFERKORDT: We started laying the foundations of this hub almost three years ago with the acquisition of BroadbandTV. By also acquiring SpotX and StyleHaul, and investing in clypd, YoBoHo and VideoAmp, we’ve added significantly to our digital presence.

As for our digital assets, according to comScore metrics, the RTL Group is now number one on YouTube worldwide, with very strong positions in the U.S., Europe and Germany. We currently generate around 11 billion video views a month, including mobile. This makes us the strongest and most international online video operator of all the broadcast groups based in the U.S. or Europe.

Creating the RTL Digital Hub underlines our strategic goal to further increase our presence in North America. The RTL Digital Hub team manages our portfolio of digital acquisitions and supports their further international expansion. It also develops external partnerships and synergies within RTL Group.

WS: What percentage of the group’s revenues come from digital? Where do you see that percentage in two years?
SCHÄFERKORDT: Digital revenue now represents 8.4 percent of RTL Group’s total revenue—almost double what it was just a year ago. This reflects the early investments we made in online video. Organically, the growth rates for our multichannel network businesses BroadbandTV and StyleHaul, and for our monetization platform SpotX, are 50 percent or more. And they will continue to grow at significant double-digit rates.

WS: Tell us about the evolution from M6 replay to 6play.
DE POSCH: The evolution of this service is a perfect example of how technological advances shape our business. As the name M6 replay suggested at launch, Groupe M6 started it as a catch-up TV service, and they were clearly a leading innovator in France. Then, our team in Paris discovered that more and more people were using the service without knowing in advance what they were going to watch.

So [our team] took the opportunity to get closer to viewers, and they turned 6play into a platform that people can customize to their own tastes. 6play’s system uses an algorithm that gathers data to suggest recommendations in line with each user’s tastes and preferences.

WS: What other examples are there across the group’s territories of offering content in new ways beyond the television screen?
DE POSCH: There are plenty, such as the successful comedy Golden Moustache, from M6 in France. At the end of November 2015, Golden Moustache even made a 75-minute “feature film,” Les Dissociés, available to the public for free. So far, the movie has had 2.8 million views on YouTube and has featured on our free-to-air TV channel W9 as a test case. Another example is the content produced by FremantleMedia for Munchies, an online platform about food aimed at a young audience, run jointly with VICE. Fremantle­Media also produces Buzzr, featuring YouTubers competing in popular game shows. Also, the children’s program HooplaKidz Plus, a brand of BroadbandTV, was named a launch partner of Amazon’s [Streaming Partners Program]. StyleHaul announced it will be a launch partner for Verizon’s go90 and offers original content exclusively on the platform.

WS: In which territories outside Germany are you seeing the most opportunities for growth?
DE POSCH: As Anke has already highlighted, our digital assets in North America will continue growing at double-digit rates.

For acquisitions, we have two main investment goals. The first is to further expand and develop in the digital domain, where we are focusing on producing, aggregating and monetizing the best content. The second is content production, because we’re certain that producing our own content and owning the rights to it will be key to growth. Our strong cash flows allow us to combine attractive dividend payments with significant investments. Our main priority has always been to develop the group, making the right investments and achieving profitable growth.

WS: On the other hand, how have you been managing business in countries with difficult economies, like Spain, France and Hungary?
DE POSCH: Let’s look at the various TV advertising markets, as they reveal quite a lot. The Benelux countries were relatively stable and solid. After a long lean period, Spain has recovered encouragingly since the end of 2013. And in Hungary, the market grew again in 2015. Also, the advertising tax, which was clearly directed against us, has been modified to a level where we can say: nobody loves to pay additional taxes, but we can continue to operate in Hungary.

France was in a very difficult position, economically and politically, in 2014 and 2015. And most countries lack one thing above all: growth. In brief, these are the framework conditions for our European broadcasting business, which is stable overall but has a certain degree of volatility. Of course, our channels will have to continue showing the best shows and formats in their lineups to achieve high ratings, which is easily said but a major challenge in the day-to-day business.

WS: Tell us about the RTL Group–CBS joint venture.
DE POSCH: It’s essentially a start-up, but it has great backing and potential. In September 2013, the venture launched RTL CBS Entertainment HD, a pay-TV channel for the entire family [in Asia]. RTL CBS Extreme HD followed in March 2014, offering fast-paced action, mainly to a male audience. So far, almost all operator partners have incorporated both channels in their offers in 18 countries. The distribution over so many different pay-TV operators is the best proof of the two channels’ appeal. Overall, the retransmission fees from pay-TV and platform operators represent a billion-dollar regional market.

Another success was that the channels were chosen to be a key part of LeEco’s pay-TV platform expansion from China into Hong Kong and Macau. LeEco is one of the largest online-streaming companies in China. So overall, we’re happy with the progress we’ve made so far in the high-growth region of Southeast Asia. But a lot still needs to be done!

WS: Are there sufficient ways of measuring the amount of viewing being done on portable devices? What more needs to be done to improve measurement?
SCHÄFERKORDT: This is a really important topic: how do you measure, and ultimately monetize, mobile, second-screen and other alternative viewing habits? Although there is more and more data available about use and viewing behavior, audience measurement does not yet match the pace of changing viewing patterns. As a result, the total net reach of a video advertising campaign is still hard to quantify across all screens. This is why we actively drive and support the cross-screen measurement initiatives in the countries we operate in.

Furthermore we’ve invested recently in VideoAmp, a U.S. start-up software company that uses its own machine-learning algorithms to optimize the targeting of cross-screen audiences—to benefit advertisers and broadcasters. The goal is to allow brands to target users more accurately and eliminate duplication. It also offers the unique ability to match digital users with TV media plans.

WS: How has the group been working with advertisers?
SCHÄFERKORDT: Advertising sales in the digital market will become much more fragmented and far more complicated. The number of highly specialized intermediaries between advertising clients and content providers has reached huge proportions. The premium segment of linear and partly nonlinear content will remain a people business, but advertising sales will become more automated and advertising technology more consolidated. Media agencies and sales houses are investing in platforms, interfaces and tools that advertising customers can use to plan and place bookings directly. RTL Group’s investment in SpotX, one of the leading platforms for video-advertising sales in the United States, is just one example.
DE POSCH: Increasing competition in the digital media world calls for closer cooperation across the RTL Group, to give our global advertising clients the best service. With its unique international presence, IP Network is ideally positioned to explore these growth opportunities for us. We recently appointed a new managing director, Stéphane Coruble. Stéphane has a very clear mission to make use of all the various RTL Group affiliates’ assets to offer a global proposition for international advertisers in the fields of video and digital marketing, branded content, and, of course, traditional TV and radio sales. Just recently, IP Network integrated our fashion and beauty MCN StyleHaul into its multiscreen offer.

And what does this all mean for advertisers? Well, there will be much more potential for targeting and reaching consumers, especially if they use programmatics that offer audience-tailored advertising.

WS: What has been the impact of Netflix in the territories where RTL Group operates?
SCHÄFERKORDT: The major impact is very simple: we focus even more on exclusive content. Apart from that, Netflix is predominantly a direct competitor to pay-TV operators. And as the company does not disclose subscriber or viewing figures for the various markets, we can’t speculate. But of course we are in competition for the eyeballs.

WS: How has FremantleMedia been broadening its portfolio?
DE POSCH: FremantleMedia, our content arm, is increasing its creative diversity—both organically and through acquisitions. Since it is already one of the biggest independent production companies, they focus on creative talent developing projects that will feed into FremantleMedia’s international network. In the last three years, it made several acquisitions that illustrate this strategy, including scripted companies Miso Film in Scandinavia, Corona in the U.K., Wildside in Italy and Fontaram and Kwaï in France, just to name a few.

Of these deals, I’d like to highlight Wildside, a leading Italian production company that specializes in scripted drama television programming and commercial feature films. Their output includes The Young Pope—their first international production—with partners including HBO, Sky and CANAL+. The series stars Jude Law and Diane Keaton, with Oscar winner Paolo Sorrentino working as co-writer and director.

But let’s not forget that Fremantle­Media has also reinvigorated its own heritage in scripted drama with series such as Wentworth and the relaunched drama label Euston Films in the U.K.

The German series Deutschland 83 has had great success internationally. Deutschland 83 became the first German-language drama to be aired, to critical acclaim, in its original-language version in the U.S. It has now been sold internationally across 19 more territories so far, including Channel 4 in the U.K., CANAL+ in France, SVT in Sweden, DR in Denmark and Hulu.

We also have hopes for a new drama, American Gods, which was greenlit by Starz. FremantleMedia will produce this show, for which ten episodes have been commissioned. The drama genre has great potential in distribution, brand partnerships, licensing, merchandising and digital.

WS: How is FremantleMedia reaching its goal of becoming as big a creator, producer and distributor of content in the digital world as it is in the traditional TV world?
DE POSCH: Digital is a key area for FremantleMedia as well. We already talked about original web content being just one pillar of our digital video strategy. In the last three years, FremantleMedia has launched regional digital studios in Los Angeles with Tiny Riot! and in the U.K. with Shotglass Media, adding to UFA Lab in Germany and Spring in Australia.

Also, FremantleMedia is closing more deals with digital platforms, including a global deal with Netflix for the new Danger Mouse series. Amazon in the U.K. acquired Wentworth, and Fremantle­Media completed a package deal with Youku that includes The X Factor UK and Project Runway.

WS: Would you give an example or two of how the RTL Group’s news, programming or corporate responsibility initiatives are serving viewers and/or communities?
SCHÄFERKORDT: Across Europe we’ve faced [the refugee situation] head on with comprehensive reporting and informative programs. Millions of viewers, listeners and readers trust us to inform them responsibly, impartially, credibly and truthfully. Our role is to help people understand all aspects of the situation and to raise awareness of the issues involved.

With our high profile as a leading media organization, we’re able to bring major issues—both social and environmental—to the public’s attention. Of course, we can also use that profile to run successful fundraising events and other initiatives to make a difference in people’s lives.

The broadcast division has long been one of three pillars of the RTL Group, fueled by market-leading linear channels across Europe. As the landscape evolved, content creation at FremantleMedia and digital assets became the other two pillars. Co-CEOs Anke Schäferkordt and Guillaume de Posch have implemented a “TV-is-total-video” strategy, which underscores the importance of long- and short-form programming, and the many ways of delivering it to viewers.

WS: What have been the keys to maintaining the relevance of linear channels?
SCHÄFERKORDT: The fragmentation of audiences and ever-growing range of devices in the digital world make our business more complex. It’s becoming more difficult to generate mainstream hits—that is, blockbuster formats for mass audiences. But with fewer of these on the market, they become more valuable. So finding the new hits—big and small—is a priority for our broadcasters and for FremantleMedia.

Our broadcasters won’t just wait for the next big hit to come from the international markets. It’s important we also develop our own formats because they shape our image, strengthen the brands and, most importantly of all, command exclusivity in the marketplace. That’s the major task for all linear TV channels in the future: to have a clear profile, something that makes them stand out. And that’s why, for example, VOX recently commissioned its first scripted series, Club der roten Bänder. With its emotional stories and outstanding young cast, the series has been the standout hit in Germany so far in this TV season, and was named best series by the German TV Awards.

Our two main channels in Germany, RTL Television and VOX, already had a high proportion of local content, with in-house productions and exclusive commissions, but now this is shifting from just over 80 percent towards 90 percent on RTL Television. I have no doubt this will bring us a huge competitive advantage over the next few years.

WS: How have viewing patterns evolved?
DE POSCH: Once again, the digital world is changing people’s viewing habits. In particular, the growing number of mobile devices that are also, in effect, video screens. Already, mobile devices generate 17 percent of worldwide internet traffic. And the younger the target group, the more they use mobile devices and so shift to nonlinear viewing. What’s more, on-demand mobile viewing, on smaller screens, means a higher demand for short-form video. This is why we invested in leading multichannel networks such as BroadbandTV, StyleHaul and DIVIMOVE.

When it comes to long-form content—full episodes of TV shows—there is a strong relationship between viewing figures for linear TV and related nonlinear content, such us catch-up services; the higher the ratings on linear TV, the higher the online video views.

WS: Tell us about the TV-is-total-video strategy.
SCHÄFERKORDT: This is clearly linked to what Guillaume has just described. Linear TV still dominates the video market, and is the only medium consistently reaching mass audiences day by day. In total, people watch more video content than ever before, in long and short form, linear and nonlinear, on the TV screen and on mobile devices. The demand for high-quality video content is growing rapidly, as is online video advertising.

So for us, TV doesn’t just mean “television” anymore, it means “total video.” And RTL Group has built market-leading positions across this new market’s value chain. With our families of channels, we are either number one or number two in the European markets we operate in. Our production arm, FremantleMedia, is a global leader in content production. And with our recent digital investments in North America—BroadbandTV, StyleHaul and SpotX—we’ve reached critical mass in online video.

With further investments in broadcast, content and digital, we are turning RTL Group into a global force in video production, aggregation and monetization.

WS: How are you reaching young viewers, who spend so much time on mobile devices?
DE POSCH: In today’s digital media world, the Millennials are an audience media companies and advertisers are most keen to reach. Anyone who wants direct contact with this target group, and anyone who wants to experience how passionate teenagers are about video content and vloggers, needs to add VidCon in Los Angeles to their calendar. I was in L.A. last summer and saw firsthand the incredible enthusiasm of thousands of young video fans. For me, it was a call to action to continue our push into short-form video. Nonlinear viewing is growing rapidly, especially short-form content among Millennials. To succeed as a company that creates and provides video content, we simply have to serve this audience, and serve it well. To do this, we’re taking three key approaches. First, we’re extending our existing TV content into the nonlinear world. Second, we’re creating new web content specifically for these digital platforms. And third, by aggregating short-form videos on platforms such as YouTube, which rely increasingly on professionally produced content.