Traditional media strikes back

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Cannes, France: Considered the most powerful media man in European TV, Gerhard Zeiler, the CEO of RTL Group, gave the opening keynote address at the MIPTV conference on Monday, 16 April. He used the opportunity to tell the huge auditorium packed with attentive delegates that traditional television, considered “so yesterday’, was still drawing big money investment. In spite of the hype round the online mega-deals such as YouTube and MySpace, there were recent multi-million dollar deals like KKR/Permira’s buyout of German broadcaster ProSiebenSat.1, BSkyB’s acquisition of UK free-to-air network ITV and the Dutch format giant Endemol was “up for sale’.

He supported his argument in favour of traditional television by pointing out that most TV companies in Europe, with the exception of the UK, recorded record earnings last year.

While his keynote speech was titled “Traditional Media Strikes Back’, Zeiler also chose a sub title, “My Big Fat Digital Future’, to indicate that he understood the inevitable future impact of the digital revolution on Internet and mobile television. “What does digital mean to the industry? Choice.’ Consumers will be able to watch whatever, whenever and anywhere. The good news for traditional TV companies is they are well placed to take advantage of it.

He gave four pointers he considered necessary for future success. Firstly, “don’t be frightened of fragmentation’. It was not enough to offer just one product, for instance one needs “a family of channels’ which if done well and clearly positioned can be profitable.

“Secondly, we should not be scared of technology. Internet TV, mobile, ipods are viewed as competition. As broadcasters we are content producers and distributors.’ RTL started as a terrestrial broadcaster, then moved to satellite and cable. Now mobile and broadcast are in the mix, he said. Content and branding were the strengths of broadcasters and they can market their television programmes across different platforms and in that way “build traditional channels’.

Thirdly, the fact that digitisation was a cheaper way of distributing content could be an advantage. “We have to find ways to make money out of the niches.’

Finally, he promoted the idea of diversity. “For too long, we have relied on advertising for our revenue. Most successful broadcasters will have to have mixed business models which will include subscriptions, content sales, merchandising, shopping TV, gaming, online communities.

“We don’t watch the world change. We must try out everything,’ he said about RTL’s business approach. “We are testing everything – pay TV, downloads for mobile phones, setting up mobile channels. We are excited about digital developments.’

The size of a broadcaster matters. “The biggest broadcasters get the biggest ad revenue.’ A big audience can be equated with big premium. But content still remains important. He referred to the US Idols which has been valued at $2.5bn by Advertising Age.

New platforms need compelling content. That makes TV the most powerful medium ever, according to Zeiler.

“Yes, content is king but brand is content’s boss. We (broadcasters) have every reason to be confident about the future. We are well prepared for the digital world.’

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