Focus and Growth Gerhard Zeiler on RTL Group’S Strategy for Future Growth

16 September 2010

week 37

Focus and growth Gerhard Zeiler on RTL Group’s strategy for future growth

Germany France RTL Aktuell goes on air from RTL Radio presents Cologne-Deutz new season programming

Asia Croatia China adapts RTL Televizija gets consession Hole In The Wall for a second channel week 37 the RTL Group intranet

16 September 2010

week 37

Cover: Gerhard Zeiler at the Bertelsmann Management Meeting in Berlin

Focus and growth Gerhard Zeiler on RTL Group’s strategy for future growth

Germany France RTL Aktuell goes on air from RTL Radio presents Cologne-Deutz new season programming

Asia Croatia China adapts RTL Televizija gets consession Hole In The Wall for a second channel week 37 the RTL Group intranet

“We know what we have to do” At the Bertelsmann Management Meeting in Berlin, Gerhard Zeiler gave a detailed outlook on RTL Group’s strategy for the next years. Bertelsmann Management Meeting in Berlin Luxembourg - 16 September 2010

Around 600 Bertelsmann executives from all having a strong family of channels: “The first over the world had travelled to Berlin to par- and still most important factor for success is ticipate in this year’s Bertelsmann Management and remains our audience share performance. Meeting. After an overview over the financial The goal is simple: the higher our market share, state of Bertelsmann, it was RTL Group CEO the better for us economically.” Already in past Gerhard Zeiler who gave the first presentation speeches, Gerhard Zeiler had pointed out the from the Bertelsmann divisions. To start off, importance of the family of channels concept, Zeiler showed a short trailer portraying RTL as reported on Backstage. Group’s history – from radio to television and from being derided to being the industry bench- mark. “Can this go on?” Zeiler asked, and said: “The good news is: we have answers. We know what we have to do. We have a strategy for how our industry can operate in the digital age.”

Before talking about this strategy, however, Zeiler took the opportunity to set the record straight regarding a few myths about TV. While some people predicted TV viewing would decrease, Zeiler presented the facts for the period from 2000 to 2010: “Whether you look at the US or here in Europe – TV viewing has actu- ally increased over the last ten years.” Regard- Gerhard Zeiler ing new media and on-demand viewing, Gerhard Zeiler underlined that though RTL Group expects In Berlin, he announced: “What you may not a certain cannibalising effect, so far the opposite know is that we have not yet achieved the final is the case. And finally: “On-demand viewing shape of our families in hardly any country. In the doesn’t increase fragmentation – as many may coming years, you will see several new chan- believe – it works the opposite way: it decreases nels across the countries we operate in.” These the effect of fragmentation significantly,” he said. will either be niche Pay-TV channels or new DTT channels or second channels in countries The RTL Group CEO then transitioned to an where RTL Group currently operates only one. explanation of the company’s business model in For example Croatia, where RTL Televizija was the digital age, which is divided into two major just granted a license for RTL 2, a new entertain- parts: optimising the core businesses – RTL ment channel that will start broadcasting later Group’s big free-TV channels – and developing this year (read more on page 12), and Spain, future growth. Talking about the focus on core where Antena 3 recently launched a third DTT businesses, Zeiler explained the importance of channel called Nitro. Also in Germany, there are

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Zeiler emphasised: “The first and in my opinion most important task we have is to establish a second revenue stream besides advertising.” Although RTL Group already generates almost 40 per cent of its revenues from non-advertising- related business, thanks to a broad range of diversification activities by the broadcasters and FremantleMedia, Zeiler intends to find a way to be even less dependent on advertising money. “The most promising way, I believe, is to finally achieve here in Europe what is already partly in

RTL Group’s new strategy is based on two parts: place in the US: That the big distribution com- optimising core business... panies – the cable industry foremost, but also the satellite platforms and IPTV networks – start more plans for new channel’s, as Backstage had to share a small part of their revenues with us”, reported earlier. During this year’s IP Primetime, he explained, referring to the conflicts in the US Anke Schäferkordt, CEO of Mediengruppe RTL within the last 18 months: Disney versus Com- Deutschland had announced that the company cast, Fox versus Time Warner Cable. “One thing plans to launch at least one new Pay-TV channel is fascinating: whenever there was a dispute in Germany. During this year’s “As long as the between a big network and a cable giant – the fragmentation goes on, it is better to fragment network won,” Zeiler said, explaining that the ourselves than to be fragmented by others,” cable industry depends on the broadcasters’ Zeiler said. brands and programmes. “We ultimately need to establish this principle in every country: instead The RTL Group CEO went on to talk about of us paying the cable industry, they pay us, advertising sales, highlighting the importance especially when it comes to new services like of innovative ad formats. The third factor to HD channels.” optimise RTL Group’s core businesses: costs. “The most important achievement of all our profit Apart from that, Gerhard Zeiler said that the centres in last year’s crisis was that they proved company will also continue launching Pay-TV our industry can adapt even to severe economic channels: “We are very successful with this developments, that we can flexibilise our costs in Germany and France, we’ve started in the much more than anybody would have imagined,” Netherlands and I can promise that won’t be the Zeiler said, underlining that all but one profit last country. All in all, increasing the money that centre managed to cut costs significantly without comes directly or indirectly from the consumer losing audience share. “If the recovery continues will be at the forefront of our strategy.” to be slight, we will have to invest more into our programming again, if we want to maintain our The second part of RTL Group’s future growth performance level,” he said, looking ahead. strategy is to establish non-linear offers for the consumer. At the Bertelsmann Management Gerhard Zeiler has repeatedly highlighted the Meeting, Zeiler repeated what he had said some importance of these three factors to optimise days ago at the IBC in Amsterdam: namely that RTL Group’s core businesses. “But is doesn’t the TV industry has learned from the music stop here,” he went on. “Running a broadcast- industry and its dependence on iTunes. “We ing operation now and in the future is a much will develop our own on-demand platforms and more sophisticated task than it was ten or fifteen years ago. If we want to grow our business in the future, we have to do a lot more“. The new growth strategy has five major pillars: establishing a second revenue stream alongside advertising, finding the right business model for non-linear TV viewing, expanding RTL Group’s content production arm, developing online and mobile businesses, and diversification.

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At the end of his speech, Zeiler presented RTL Group’s four rules for success have already done so in most of our countries,” The last part of RTL Group’s strategy to he said, while also outlining how to do business secure future growth is what Gerhard Zeiler calls with other on-demand services. Whether with diversification businesses, structured into four national platforms, which might be established categories: Brand Exploitations (for example: M6 in some countries by all the national broadcast- Mobile by Orange in France), Live Events (such ers, or whether with third-party platforms, such as the “American Idol Experience” in Florida or as Hulu, two conditions have to be met for the daily Price is Right live shows in Las Vegas), RTL Group to work with them. “We don’t sell Home shopping and E-Commerce and Rights programmes on their own; we only sell them with Trading with companies like Universum Film our channel brands. We only will deal with them and SND. “Another category that looks espe- if they accept a shop-in-shop-like concept. And cially interesting and also lucrative is the gaming the second condition is that we – not they – will industry,” Zeiler said. sell the advertising.” Just before ending his speech with an impres- In elaborating on the third part of the strategy sive trailer about RTL Group’s true talents and to develop future growth, Zeiler talked about stars, Zeiler presented four rules for success at content, and cited FremantleMedia as one of RTL Group. About the first rule, decentralisation, a very few production companies that operate he emphasised: ”We shouldn’t just talk about globally. “We are seeing quite a lot of merger it, we have to live it. I believe one hundred per- and acquisition activity in an effort to compete cent that there would have been absolutely no with FremantleMedia,” Zeiler said, underlining way to survive last year’s crisis in the way we the fact that to maintain its market position, did if there had been a central programme or a FremantleMedia needs to grow. “This also means central directive on how to do it.” The second to invest – especially in talent and formats. Our rule is to avoid a culture of blame, Zeiler said: management team has a very ambitious goal: to “In a creative industry – and we are one – there double profitability by 2015.” is no bigger dampener than an atmosphere of anxiety and fearfulness about the next flop. RTL Group has plans to invest not only in the Don’t misunderstand me: I’m not saying every content business but also in online activities and mistake should be treated casually taken in mobile TV, using the Internet as a great market- stride. No, every project, every investment that ing tool on the one hand and “secondly, because hasn’t developed as planned needs to be ana- if the Internet does one day take advertising lysed in detail to find out what went wrong and money away from TV, we want a part of it back,” in order not to make the same mistake again.” Zeiler said. “A media company like ours can’t The third rule Zeiler mentioned is to invest in afford not to invest in online activities, whether it high-growth markets. “This means first being is in special-interest verticals or in mass-market open-minded about changing our way of operat- oriented social networks.” ing, as we will face a somewhat different cultural environment. And secondly it means a different Furthermore Zeiler is convinced that Mobile TV level of risk taking, which we will have to adapt will become huge and that RTL Group needs to.” Finally, Zeiler stressed that it is also crucial to invest in it now. “And that’s what we are to invest in existing businesses. “Let’s not give in doing. We’ve already got more than 40 iPhone to simple ‘Cash Cow’ thinking,” he said closing and iPad applications, some of them with his speech: “I am one hundred percent sure that surprisingly high download numbers. And our our journey really can go on. I am one hundred first few live TV applications show you that we percent sure that the future of TV is…TV.” are and will be on the forefront of this development.” 5 week 37 the RTL Group intranet

News as TV experience RTL Aktuell with Peter Kloeppel became the first news programme to go ‘on air’’ from Mediengruppe RTL Deutschland’s new, fully digitised broadcasting centre in Cologne-Deutz. Peter Kloeppel (left) and Ulrike von der Groeben in the new studio Germany - 13 September 2010

New technology and a new look: In Deutz, all information programming is produced in native HD and now on air in a fresh new design. Explosiv, Exclusiv and Extra led the way in June, followed by Vox’s magazine show Prominent! After the magazines had gotten off to a successful start, on 11 September RTL Aktuell with Peter Kloeppel became the first news format to begin broadcasting from the new 410m2 studio auf. “For the first time, all of the parts of Mediengruppe RTL Deutschland that produce information programming, are together The new premises of Mediengruppe RTL Deutschland in Cologne-Deutz under one roof. This greatly speeds up the processes of coordination between the Following the Deutz debut of RTL Aktuell, other channels, and the various news and magazine news formats will follow in September: News programs benefit much more from each other am Morgen, Punkt 12, RTL Nachtjournal and than before,” says RTL Television’s Editor-in- the RTL II News and Vox News. From October, chief Peter Kloeppel. N-TV will broadcast its comprehensive news and business coverage from the newly designed Viewers also benefit from this new era in studio in Deutz. TV technology. The moderators have more options for working with interactive elements on By the end of 2010, the 2,000 employees at RTL the screen and can use 3D models, information Television, Vox, N-TV and Super RTL, as well diagrams and a large touch screen to illustrate as Info Network, RTL Interactive, the Cologne complex contexts even more clearly. Fully au- Broadcasting Center (CBC) and IP Deutschland tomated HD cameras, virtual set technology, will be working under a shared roof. The group and special graphic and camera systems make has rented 80,000 m2 of space. Special attention possible innovative pictures and promise to was paid to resource conservation and ecologi- deliver a whole new TV experience. cal aspects in converting the gutted Rheinhallen buildings.

Mediengruppe RTL Deutschland’s new broadcasting centre thus features state-of-the-art technology in all areas.

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Video advertising is an attention-grabber In a just-published study, IP Deutschland examined the effectiveness of ads embedded in video streams on the Internet (in-stream advertising). Its conclusion: In-stream advertising gets a lot of attention. Germany - 16 September 2010

Constantly high attention

viewers in per cent viewers in per cent

86% time in seconds 84% time in seconds

Pre-Rolls are watched by an average of 86 per cent of the viewers, while mid-rolls are watched by 84 per cent.

Video advertising has long since evolved from The results of the study are extremely positive being a mere trend to become a fixed element for both forms of in-stream advertising. Both in online advertising – and it reaches a mass shine the spotlight of the viewer’s attention audience, as 33 million households possess on the brand from the very first second. They the technical means necessary to use video were both shown to generate the same contact advertising. The appeal of the setting and of the time. This means that 86 per cent of the ad is ad itself play a major role in effectively targeting watched, while the viewer share remains nearly this huge audience. ‘In-stream video advertising the same and equally constant. There are no big formats’ are spots that are integrated directly differences between the eye movements tracked into the video content. According to a lab study for pre- and mid-roll ads, either. The results are performed by the Phaydon Research + Consul- unambiguous: in both pre- and mid-rolls, the ting institute on behalf of IP Deutschland, these spotlight is on the brand and the product – during commercials are a veritable attention magnet. 90 per cent of the time during which the product The usage behaviour of around 150 participants and brand are shown, the user’s eye focuses on aged 14 to 59 was examined in the study. the product and/or brand name shown.

The study involved a comparison between The upshot of the findings: whether various in-stream ads. In an experimental pre- or mid-roll, in-stream advertising generates studio test, pre- and mid-rolls were integrated into enormous attention and is literally an various use sessions. Pre-roll ads show the eye-catcher. advertising message before the requested video starts, while mid-roll ads appear some- time during the video. The experiment inserted commercials for three known brands, which hadn’t been broadcast on German television yet. Eye-tracking data and the survey results yielded a comprehensive picture of the effectiveness. 7 week 37 the RTL Group intranet

An autumn line-up of Disney stars Super RTL’s new episodes of its Disney series will be accompanied by one of the most extensive campaigns of the year. Germany - 14 September 2010

Fans of Hannah Montana, The Suite Life On Deck and The Wizard Of Waverly Place have a total of 100 new episodes to look forward to. Super RTL is promoting the new episodes starring the ‘Hollywood clique’ with a campaign Super RTL’s magazine ad involving a gross media volume of over one million Euro.

Until 17 October, Disney stars will be the centre of attention on all Super RTL platforms: on TV, there will be exclusive trailers featuring Super RTL presenter Nina Moghaddam and Hollywood Clique stars such as Miley Cyrus and Selena Gomez, while Toggo.de presents background information, a number of ‘star week’ features and a drawing of attractive prizes for users.

Apart from this massive on-air and online presence, the Disney stars will be seen off-air as well. Huge billboards and advertising pillars in 14 big German cities will draw attention to Hannah and the rest of the Disney gang. Note- books, milk cartons and sticker cards communicate the campaign content to kids, and ads in key children’s publications such as Bravo Girl, Micky Maus, Wendy and Yeah! along with ‘star week’ promotions on Toggo fun Day round out the large-scale autumn campaign.

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China adapts Hole In The Wall Hole In The Wall has become the first international format to be picked up for adaptation by the China Central Television network’s flagship channel, CCTV1. China - 14 September 2010

Patrick Schult, CEO FremantleMedia Asia, said; “We are delighted to be working with CCTV1 on this groundbreaking project. Hole In The Wall is a unique, creative and very entertaining game show which has been a phenomenal success around the world, and we’re very pleased to be launching the show in China in strong partnership with the premium channel of the CCTV family.”

Hole In The Wall originated in Japan on the Fuji TV network in 2006. The fun, action- packed game show went on to become one of FremantleMedia’s fastest-selling formats and has now travelled to more than 40 countries. It will premiere in China on CCTV1 on 19 September, airing as a 50-minute weekly show.

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“A leader moving forward” RTL Radio unveiled its schedule for the new radio season in France with some new recruits for France’s leading radio station. Christopher Baldelli France - 10 September 2010

During the second quarter, RTL Radio drew conduct an interview at 8:15. RTL Radio France 6.3 million listeners per day, putting it far ahead has also come up with new shows for its listen- of the competition. The Chairman of the Board of ers, including Le Grand Quiz des histoires de RTL Group’s French radio stations, Christopher France, hosted by Laurent Boyer Saturdays and Baldelli, is encouraged by this great popular Sundays from 11:30 to 12:30 to learn French success. At the press conference he said: “In history in a fun way. The station’s “sure bets” this new season, RTL is, first of all, a leader that are still there: humorist Laurent Gerra, political is moving forward. We have consolidated all of journalist Jean-Michel Aphatie and his 7:50’s our number one positions, whether in terms of much listened political interviews, football audience, digital technology or economic experts Eugène Saccomano and Bixente Lizara- results.” zu, journalist Harry Roselmack and his famous Journal inattendu, and of course polemicist Eric Thus, France’s number one radio station is Zemmour. reinforcing its leading status, notably by making changes in its new season schedule, France’s number one radio website, RTL.fr, will “the biggest change in years,” explains be relaunched on 21 September in a revised Christopher Baldelli. “The world is changing format. Featuring new navigation and design, and so is RTL. We continue to hold very high the site will provide more interactivity and more standards for ourselves.” RTL Radio France “sounds”, with more videos of the shows. Still recently appointed as its new Programme in the digital domain, RTL Radio is launching Director Yves Bigot, a seasoned professional in two iPhone applications: one that is already radio and television. available, RTL Témoin, for sharing photos with other members, and another coming soon, There are new voices joining the station: former RTL Foot, which will allow users to follow the TF1 presenter Flavie Flament will host at 15:00 results of League 1, League 2 and France’s Tout le plaisir est pour nous (The pleasue is national team matches live. As for concert mine), a weekday programme to chat with events, Christopher Baldelli has announced a personalities. Jacques Pradel will host L’heure partnership and a private concert with Robbie du crime (Crime’s hour), Laurent Bazin will Williams on 10 October. co-present the news at noon and Yves Calvi will

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Getting back again joie de vivre thanks to music Radio 538 gets involved for children in war zone – In preparation, Radio 538 DJs Jeroen Nieuwenhuize and Jens Timmermans went to Sierra Leone to work hands-on for the independent organisation War Child. Netherlands - 13 September 2010

Last week, the two DJs were returning from Africa, where hundreds of thousands of children grew up with a violent civil war. They talked to children and young people about their war experiences, visited War Child projects and discovered what it means to live in a former war zone.

Jens declared: “I felt like crying when I heard the war stories from Sierra Leone. But what I saw during the War Child workshops was positivity. The kids are thinking about their future again.” Millions of children are still growing up in wars. Radio 538, the most popular radio station in the Netherlands, decided to do its bit by working with War Child to help more war children. Jeroen and Jens visited Sierra Leone from 3 September to 9 September. In that former conflict area they spoke with children and young people. War Child invests in a peaceful future for children affected by war: taking a creative and participa- tory approach, War Child helps children to work through their war experiences. The organisation protects children from the impact of armed conflicts, encourages their psychological and social development and organises education. Using music, War Child brings children back together and teaches children to acknowledge and lessen their emotions. War Child works with dozens of local partner organisations and is active in 12 countries. Jeroen and Jens also gave the kids a lesson in being radio DJs

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A new entertainment channel in Croatia The Electronic Media Council has granted RTL Televizija a concession for a new specialised channel, named RTL 2 and specialised in entertainment. Croatia - 15 September 2010

RTL 2’s strength will be formats about actual people and actual experiences, presented from the viewpoint of real people in a magazine-type daily talk show and various lifestyle shows. A new talk show called RTL Salon (working title), will be broadcast during prime time every weekday, making the new channel particularly interesting for Croatian audiences.

RTL Televizija CEO Johannes Züll says: “We are tremendously happy that the Electronic Media Council decided to grant us the specialised channel concession. RTL Televizija is committed to the market and to new trends and we believe we can offer viewers a refreshing diversity of programmes. This long-term investment will provide entertainment for the whole family, with a daily talk-show as the backbone of the everyday programme. We will begin broadcasting as soon as possible, in accordance with the legal regulations.”

RTL 2 fulfills all the requirements for a specialised TV channel, such as a specific share of European audiovisual works of art, including a certain number of Croatian audiovisual works, and some in-house productions. Independent audiovisual production companies will account Johannes Züll for a considerable portion of the in-house The new entertainment channel RTL 2 is poised productions. RTL 2 is expected to gradually to introduce a unique new offer to the Croatian grow its advertising share to ten percent, but media landscape. With more than 70 percent of the final and actual results will largely depend its content consisting of high-quality entertain- on any changes to media legislation and on the ment, RTL 2 will focus on broadcasting enter- fragmentation of the market. taining and interesting programmes about all aspects of life: studio shows, travel and nature programmes, culinary shows, entertainment shows about children, automobiles and technology, humour, entertainment series, and music, making RTL 2 an ideal choice for the whole family.

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Wake up every morning ‘Right on time’ On Monday, Alpha TV viewers started their day with the second season of Pano stin ora (Right on time) in a completely revamped set and with fresh new faces. Greece - 14 September 2010

The first season of Pano stin ora recorded one of the steepest increases in ratings in Greece. According to data from Nielsen Audience Measurement, from the beginning of the show in October 2009 to the end of the season in June 2010, the ratings increased by 74.5 per cent in the 15 to 44 year old target group.

In the new season, the morning show, which starts at 7:00 daily, brought along a set of Elena Papavasiliou and Spiros Lambrou novelties. The decor of the programme has been modernised to give it a more contempo- rary look, efforts have been made to make the content even more appealing to viewers, and new presenters have been brought in. Viewers will wake up every morning with Spiros Lambrou and Elena Papavasiliou.

The show features discussions with in-studio guests, news from Greece and abroad, advice, reports focusing on current events, lifestyle and new trends.

13 Planet Blue Last weekend, Vox devoted a whole programming day to the topic of water. Water as a source of life, a habitat but also a life-threatening force – these were the three topics on which Vox l broadcast top-notch, multifaceted and meticulously researched documentaries and reports, such as the BBC documentary ‘Around the World In A Drop Of Water’ or the Oscar-winning documentary ‘The Cove’ by the animal activist Ric O’Barry. week 37 the RTL Group intranet

In the driver’s seat of the C-Zéro RTL Radio gave its listeners a sneak preview of France’s first electric zero-emission car. France - 13 September 2010

First show wins pole position With its all-new game show Le Juste prix, RTL-TVI is the number one channel in its time slot in French-speaking Belgium. Belgium - 14 September 2010

Offering online restaurant booking service Following its successful collaboration since 1 July 2010, RTL Nederland announced its takeover of Couverts.nl. Netherlands - 15 September 2010

Producing political formats for teens Grundy Light Entertainment is producing two political youth formats for the “Du hast die Macht“ (You’ve Got the Power) online initiative jointly organised by UFA and the Robert Bosch Foundation. Germany - 14 September 2010

The treasure hunt is on at M6 More than enough useless objects filling cupboards and gathering dust? On 18 September, M6 will launch Un trésor dans votre maison, a programme for helping families resell their hidden treasures at the best price. France - 15 September 2010

Rebecca Bonbon launches in the German market FremantleMedia Enterprises and the mail-order retailer Otto will exclusively launch the premier collection of the new fashion label, Rebecca Bonbon, in Germany. Germany - 16 September 2010

For the pleasure of the game M6 and Everest Poker announce the launch of 100% Poker, a TV programme based on an innovative concept that will bring together the finalists of a tournament that starts online. 15 France - 16 September 2010 http://backstage.rtlgroup.fr http://backstage.rtlgroup.com http://backstage.rtlgroup.de

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