RTL CEO Nails It

Michael Hedges August 31, 2009 (Follow on Twitter)

Troubled times need clear minds. It’s proving increasingly clear that the media world’s blur about what’s new and what’s old – and what works and what doesn’t - is just as wrong today as it was two years ago or twenty.

The Edinburgh International Television Festival, sponsored by the Guardian Media Group, brings out the best and brightest along with the loud and pompous. Coverage of the event, concluding this past weekend, was focused on the appearance of James – The Younger – Murdoch, his criticism of anything getting in his way and the resounding sympathy he received from the beleaguered British television luminaries.

Less reported – far less – was RTL CEO Gerhard Zeiler’s World View presentation. (Read here in Media Guardian) Zeiler runs the biggest television and radio company in Europe, which is owned by Bertlesmann the biggest media company in the world. He’s seen a lot of TV. His company has broadcast a lot of TV. It has produced a lot of TV.

“It is my sincere belief that outside Hollywood,” he said warming up the audience, “the UK is the most important and influential creative engine of the global TV industry.” He then went on to explain why that is. “You'll forgive me for this,” he appended, “as it comes from a passionate anglophile who believes that – while British TV is one of the best in the world – it could do even better.”

Zeiler’s reality check on the state of media was crystal clear. Advertising revenues won’t make a quick recovery neither will they “return to previous levels as fast and easily as some of us may think.We have to face up to the fact that the heady days of the television industry that we've all known and loved, are gone at least for a while.”

Too polite to use the appropriate explicative, Zeiler said the real problem for free-to-air television isn’t the bally-hooed transfer of ad spending from TV to online. “I don't believe that for a minute. TV is still and will continue to be the (emphasis his) lead medium.”

The “homegrown problem” he sees is dismal economics: “the law of supply and demand.” More channels and less demand push down ad prices. “That is the stark reality we face.”

Concisely, Zeiler offered four strategic points about that “stark reality.” Most, he granted, are long term, involving changes in regulation, changes in business model and changes in audience behavior. For those who grew fat in the days of easy money, it’s not a happy thought.

“The old 30-second spot is not dead and never will be,” he said, “but we need to start thinking about additional products that turn advertising into more than simply a commodity.”  Could it be he’s suggesting life beyond GRP’s?

Beyond ad revenue, Zeiler sees opportunity for pay TV offerings. “Every major free-to-air commercial broadcasting group will need a pay-strategy. Each of them will have to identify which part of their offer is so exclusive and unique that it would work in a pay environment.”

Non-linear TV is Zeiler’s third compelling strategy, competition issues notwithstanding. “Every TV group will establish its own service on its own website. But there is also an opportunity to develop an industry wide platform, where all the broadcasters take part.”  It’s a daring thought and making it work will need exhaustive lobbying.

“Last, but not least,” he concluded, is serious cost control. Easy for the German guy, yes? Actually, Zeiler is Austrian and ran Austrian public television before joining RTL.

“When I say significantly I do not mean 3% or 5%,” he offered. “I mean at least 10%, if not 15% or 20%.” Roger that!

“It's necessary,” he reminded. “Some of you may say this will rapidly reduce programme quality and thus audience shares, and I answer that this is not necessarily the case.”

Lest he continue his painful and “necessary” prescription, Zeiler praised the British television industry. “All US networks look to what their British colleagues are developing and commissioning. Britain's production companies are all of a sudden a major force in American television.”

European broadcasters – and others, presumably – can learn a lot from the British, he said. Firstly, risk taking comes easy to Anglo-Americans, not easy for others to adopt. It is, of course, cultural.

“The biggest lesson Europe has to learn has to do with changing their attitude to trying out new things. I often describe it this way: In the UK everything is allowed that is not forbidden. In other countries, especially in the German-speaking ones, everything is forbidden, that it is not specifically allowed.”

With Zeiler’s experience with public television, he suggested the British television industry – if not its regulators – had something to learn from Europe. “Don't mix public service broadcasting with commercial TV. Make a clear distinction between them.”

Echoing a theme heard often and widely held, Zeiler scratched his head on the subject of regulation. “I sometimes have the suspicion that the German law was drafted by Brits, and the UK-law drafted by Germans.”

“In fact, I don't know of any other European country that has so many regulations and restrictions regarding broadcasting. As liberal, open-minded and protective as the UK is regarding its creative community, it is so much more restrictive and inflexible when it comes to broadcasting.”

Tough times also need tough minds. Gerhard Zeiler has television coursing through his veins as much as Rupert Murdoch has cold, black printers ink. The difference is how well one parses complexity… and with it reality.

See also in ftm Knowledge

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Few media groups have the scale and dynamics of Bertelsmann. From austere beginnings as a hymnal publisher, it has become the dominant European publisher and broadcaster through subsidiaries RTL and Gruner + Jahr. And it's arms reach around the world. ftm explores Bertelsmann and RTL. 30 pages. PDF (April 2010)

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