Dirk Gerkens Explains How the Hungarian Advertising Tax Threatens Freedom of Media

week 25 / 19 June 2014

OPEN CONTROVERSY Dirk Gerkens explains how the Hungarian advertising tax threatens freedom of media

Luxembourg United Kingdom France What did the Britain’s Got Talent M6 wins prize Employee Survey enjoys record-breaking for a report on the 2013 change? digital campaign! family life of gay couples week 25 / 19 June 2014

OPEN CONTROVERSY Dirk Gerkens explains how the Hungarian advertising tax threatens freedom of media

Luxembourg United Kingdom France What did the BGT enjoys M6 wins prize Employee Survey record-breaking for a report on the 2013 change? digital campaign! family life of gay couples Cover Dirk Gerkens, CEO of RTL Hungary

Publisher RTL Group 45, Bd Pierre Frieden L-1543 Luxembourg

Editor, Design, Production RTL Group Corporate Communications & Marketing

k before y hin ou T p r in t

backstage.rtlgroup.com backstage.rtlgroup.fr backstage.rtlgroup.de QUICK VIEW

What did the Employee Survey 2013 change? RTL Group p.9–11

Britain’s Got Talent enjoys record-breaking digital campaign! FremantleMedia United Kingdom Dirk Gerkens: p.12–13 “Every Euro spent on advertising means M6 wins prize 4.7 Euros for the economy.” for a report on RTL Hungary the family life p.4–8 of gay couples M6 p.14

Big Picture p.15

SHORT NEWS p.16

PEOPLE

p.17 On 11 June 2014, the Hungarian Parliament approved a tax bill on “EVERY EURO SPENT advertising revenues. RTL Hungary’s CEO Dirk Gerkens outlines the ON ADVERTISING characteristics of the Hungarian media landscape and explains how this law MEANS 4.7 EUROS will have a negative impact on the Hungarian economy. FOR THE ECONOMY.”

Hungary – 19 June 2014 RTL Hungary

Dirk Gerkens, CEO of RTL Hungary

4 What are the characteristics of the Hungarian TV Hungarian media company, we would be the only market? ones subject to this unseen amount. The law has been designed in such a way that it mainly damages Hungary has a very competitive television market RTL: our group in Hungary represents about 15 with 90 per cent multichannel homes, four satellite per cent of the total Hungarian advertising market, platforms. The market is already fully digital, the while we would have to pay about 65 per cent of the analogue switch-off happened last year. The total tax. This is completely absurd. This extra tax advertising market has seen some tough years. is charged on revenues, not on profi ts and would Since 2008, the market has decreased by 50 per theoretically wipe out all of RTL Hungary’s profi ts. cent, and 2014 is the fi rst year where we are seeing It is totally clear that there are specifi c business some slight growth. circles behind the governing party who suggested this law in order to interfere with normal business procedures using non-market tools. The law has nothing to do with balancing state accounts, since it has a very small total volume compared to the size of the state budget: the total sum expected from the whole market would not be more than about 11 per cent of the annual cost of the public-service media.

RTL Group’s Hungarian family of channels is the market leader in Hungary

38 All day

Prime time 30.2 RTL Group’s Hungarian family of channels

18.3

15.6

What position RTL Hungary has in the current 9.2 media landscape? 8.6

RTL is the leading television group by far. RTL Klub Hungarian TV2 Group Public channels RTL channels is our ﬂ agship channel and has been the market- leading channel for 15 years as well. We have seven Audience share of the top three channel groups in Hungary Target group: 18-49 cable channels featuring all kinds of genres from music to cooking. The country’s two biggest cable channels are also part of RTL Hungary: Film + is How has RTL Hungary contributed to the growth the biggest movie channel in the country, while Cool of the Hungarian economy in the last 17 years? mostly has US series and movies as well. These two channels together with RTL II, which was launched A recent study in Hungary indicates that every in October 2012, are part of our commercial offer, Euro spent on advertising means 4.7 Euros for the RTL 3. It means that these three channels operate economy. So our contribution is really big. Hungary in a mirror break system, which – after RTL Klub – is had one of the highest license fees of any country the second biggest commercial offer on the market. even before the analogue switch off, so besides all our taxes, we also contributed millions of Euros How will the new law affect the current media in license fees to the state budget. RTL as the landscape and what are its short- and long-term biggest media group has become a real institution consequences for RTL Hungary’s operations? in Hungary with various public-service activities and charity actions. We support a variety of cultural According to the law, the companies will have to pay events in the country and have raised signiﬁ cant ad tax on that part of their tax basis which is above funds for many different goals. Our political and half billion forint. Up to HUF 5 billion, the tax rate informative magazines have been on the air for would be 1 per cent, but for the part above HUF 20 many years and have won a number of prizes for billion the media companies have to pay 40 per cent journalistic excellence, including, just recently, the tax on ad revenue. Given that we are the biggest Pulitzer Memorial prize. We are always among

Next >

5 the top winners of the annual television awards in What is RTL Hungary’s action plan and has it Hungary, with a wide range of shows like X-Faktor, joined forces with other entities of the media I Am A Celebrity – Get Me Out of Here and Való industry in raising its protest? Világ, to mention just a few. Obviously we are one of the biggest commissioners of local productions, This is the ﬁ rst time in the last 17 years that the and have also coproduced a lot of movies in the last whole industry has unanimously protested against, 17 years. And obviously we have created hundreds regardless of individual political standpoints. This is of jobs in the country, at RTL and indirectly at our a big thing. Obviously we will make sure this topic subcontractors. stays on the public’s agenda and will use all legal possibilities both inside and outside Hungary to challenge this law.

In 2014, RTL Klub dedicated airtime to raise money for the ‘Bátor Tábor Foundation’

How does the new law harm the independence and freedom of the media? RTL Klub’s info magazine Házon Kivül In recent years there have been many, many changes in the Hungarian media landscape. The sold circulation of printed publications has decreased drastically. The public-service media have always Background been under the infl uence of the governing party in Hungary, and the new media law increases this The new tax will be progressive, with the top 40 per infl uence further. The state news agency gives its cent levy imposed on annual advertising revenue of news free to any and all media, which means that more than 20 billion forints (about €65 million). It was smaller radio stations that can’t afford their own news introduced as a matter of urgency by the Government production will use the government-produced news. and is supported by the far-right opposition party. A ProSiebenSat1 has sold TV 2, our biggest competitor few days after its adoption by Hungary’s legislative – offi cially through a management buyout, but it is body, Hungarian President János Áder ratifi ed widely rumoured in Hungary that the real owners the Act on Advertising Tax, although there were behind it are closely associated with Fidesz, are widespread protests against the law. in fact in its main background business circle. The same applies to the only national commercial radio RTL Klub is the only company in Hungary with station. So RTL is practically the only independent enough revenue to be taxed at the highest tax mass media left in the country. If our independence rate, that is to say 40 per cent. Under the new law, were to be broken, there would no longer be any half of all taxes on advertising would be paid by media at all without the infl uence of Fidesz. RTL Hungary, while its share of the total advertising market is only around 15 per cent. This situation not only contradicts the principles of proportionate sharing of the public burden and neutrality of competition, but also shows that the idea behind the new legislation is to silence the country’s biggest independent TV channel by wreaking havoc with the profi tability of RTL Hungary’s operations.

Next > Hiradó presenter D.Tóth András. Since 1997, RTL Klub’s news programme Hiradó reports objectively on current affairs and social issues

6 Unprecedented action

The overwhelming majority of the Hungarian media and advertising world have expressed their strong concern about the tax impact on the freedom of WHAT DO HUNGARIAN POLITICIANS press and independent media. At the beginning SAY? of June 2014, more than 130 TV channels, radio stations, newspapers and websites jointly protested State Secretary János Lázár: “RTL is the law by switching to a black screen or blank front threatening the country and blackmailing pages – an unprecedented and unique action in the viewers and politicians. It had better do so history of the European media landscape. at home, in Germany, and not in Hungary”. The state secretary acknowledged that “indeed there is no budgetary compulsion” in connection with the ad tax but there are too many ads, which is dangerous for children, and it is annoying that “you cannot watch a movie properly because of the frequent ad breaks” (Source: Index.hu).

Hungarian MP László L Simon stated that the purpose of the new tax imposed on the media sector that is “generating significant profits” is a “more equitable sharing of the burden” (Source: Index.hu). Andreas Rudas, Executive Vice President Regional Operations & Business Development CEE and Asia Fidesz’s Deputy Speaker of the House Gergely Gulyas said on state television that Commenting on the adoption of the law, Andreas the levy is a form of “a public healthcare Rudas, RTL Group’s Executive Vice President duty since commercial televisions cause Regional Operations and Business Development great social harm.” (Source: The Wall Street Central and Eastern Europe and Asia, says: “The Journal) adoption of this law is a direct attack on all of Hungary’s free and independent media, and in particular on RTL Klub, since we are the largest independent media company in Hungary. We are capable of handling conﬂ ict and will defend ourselves – together with the other independent media. It is unacceptable that there is a country in the middle of Europe where basic democratic rights such as freedom of the media are up for discussion. This tax is an attack on the European spirit and against European values.”

Watch the video (in German) of RTL Nachtjournal’s report on the new Hungarian media law

X-Faktor contestant performs in a CR initiative

Next >

7 RAISING THEIR CONCERNS

Asked to comment on Hungarian tax bill, Ryan Heath, Spokesman for Vice-President of the European Commission Neelie Kroes, said: “There are many forms of government action that can have a chilling effect on media freedom and I think in that ...IS A LEADER IN THE context, it is fair to say that the commission MEDIA LANDSCAPE is concerned about the possible impacts RTL Hungary is the biggest player in the Hungarian on media freedom from this tax.” media market. In 2013, the combined primetime audience share of RTL’s Hungarian family of (Source:http://ec.europa.eu/avservices/ channels in the key demographic of 18 to video/player.cfm?ref=I090466) 49-year-olds increased to 38 per cent (2012: 37.3 per cent). Last year, the fl agship channel RTL Klub The Association of Commercial Television was again the most-watched channel in Hungary in Europe (ACT) has condemned as in the commercial target group on 342 out of 365 evenings, and it broadcast 18 of the year’s 20 disproportionate and counter-productive most-watched fi lms. the new Hungarian legislation which introduces punitive taxation on advertising ...BOOSTS THE revenues of media companies. HUNGARIAN ECONOMY (Source: www.acte.be) RTL Hungary has been operating in the country for 17 years, since the launch of commercial television Dunja Mijatovic, the OSCE’s Representative in the country. RTL Group’s longstanding commitment for Press Freedom, told The Associated to the economy, prosperity and growth of the Hungarian Press: “It [the new Hungarian ad law] media market has been proven among other things by its investment in seven cable channels, and the increase could negatively affect media pluralism of its stake in Magyar RTL Zrt. RTL Group re-invests a and it may harm media freedom in signifi cant portion of the profi t it generates in Hungary into Hungary. The law should be sent back the Hungarian market. to the Hungarian parliament for further discussions involving all stakeholders.” ...CARES FOR THE (Source: NYT.com) HUNGARIAN PEOPLE RTL Hungary provides for the livelihood of around 600 Lydia Gall, Researcher at Human Rights families, directly or indirectly, and its popular locally Watch, wrote: “It’s high time for the EU produced programmes provide daily entertainment for and the Council of Europe to wake up and several million citizens. Moreover, each year it pulls out all the stops to support good causes, and acts as a recognise that allowing Hungary to flout responsible member of Hungarian society. fundamental principles undermines not only the rights of Hungarian citizens To name a few corporate responsibility examples: but also risks bringing into question the In 2013, on World Diabetes Day, RTL Klub news credibility of these institutions themselves.” anchors Antónia Erős and István Szellő hosted an awareness-building event organised by the ‘Egy Csepp (Source: www.hrw.org) Figyelem’ foundation and featuring performances by X-Faktor contestants. Angela Mills Wade, Executive Director On 24 May 2014, RTL Klub dedicated airtime to of European Publishers Council stated: raise money for the ‘Bátor Tábor Foundation’, which “This is another attempt by the Hungarian supports children with chronic diseases and their families. This activity raised more than €20,000 in Government to undermine the freedom of donations to help the charity provide valuable support to the press, a freedom that is highly prized sick children. by Europe’s democratic Member States. A free, independent and pluralistic media ...IS AN INDEPENDENT relies on the income from advertising to SOURCE OF INFORMATION invest in programme production and For the last 15 years, RTL Klub has been regarded quality, authoritative, accountable as the country’s most independent source of journalism.” television news. RTL Klub’s info magazine Házon Kivül (Source: http://epceurope.eu) won Kamera Korrektúra’s ‘News and Background’ special prize in 2013. Moreover, in the same year, Házon Kivül won the ‘Pulitzer Memorial Prize’ for its objective and clear reporting. 8 WHAT DID THE EMPLOYEE SURVEY 2013 CHANGE? RTL Group

In September 2013, Backstage presented June 3–17 Employee Survey 2013 the results of the employee survey carried out in June 2013. Backstage asked Co-CEOs of RTL Group Anke Schäferkordt and Guillaume de Posch, as well as Executive Vice President Human Resources at RTL Group Romain Mannelli, what projects have been implemented since then. Luxembourg – 11 June 2014

‘Take part! Take Action!’ was the motto of the Employee Survey 2013, and that is exactly what happened. With a participation rate of Take part! 86.9 per cent, RTL Group’s employees voiced their opinions. Since Take action! then, more than 160 projects and actions were reported. In a status

June 3 marks the start of the worldwide employee survey. Take the time to share your thoughts on important aspects of your professional life and help shape the future of our company. report from end of April 2014, 645 team managers reported that they have developed action plans with their team, mainly with regard to the categories ‘Continuing Education & Training’, ‘Working conditions’, ‘Team’, ‘Career Development’ and ‘Supervisor’. Poster of the Employee Survey 2013

RTL Radio Center Berlin will handle the organisation and coordination, while Radio NRW’s football crew produces the coverage

96 per cent of the 75 companies have reported actions in various ﬁ elds Next >

9 The results also initiated action at 96 per cent of the 75 RTL Group companies that participated in the survey. ‘Continuing Education & Training’ is the main topic here, too, followed by ‘Strategy’, ‘Working conditions’, and ‘Career Development’.

Anke Schäferkordt, Co-CEO of RTL Group said: “We’ve always said that it is not only important to listen to what the employees have to say, but even more important to take action afterwards. Given this, we are pleased that almost every supervisor has discussed the results with their teams and that tangible actions are taken. Apart from these actions taken in the business units, we also take action on Group level. This year again, we organised our Management Congress which is an important tool in strategy communications and motivation. Only if the management knows the strategy by heart, they can communicate it to their teams.” The RTL Group Management Congress was held in Amsterdam and Hilversum beginning of June, with more than 260 executives attending.

In connection with ‘Career Development’, RTL Group and its business units have decided to jointly address the wish of the 1,845 employees of the Group who agreed with the statement “Moving to a company / companies within RTL Group in another country is important for my career”.

With the support of the respective CEOs and the Executive Committee of RTL Group, the HR teams launched a Group-wide dialogue with employees on this topic in May 2014. Guillaume de Posch, Co-CEO of RTL Group, explained: “The purpose of this ‘internal mobility survey’ is to speciﬁ cally identify employees who wish to move and to get a clear understanding of their expectations – and then to develop feasible solutions that make sense for both the employee and the companies. We believe that internal mobility can be a real performance booster within the Group and are willing to encourage it.”

694 supervisors were asked to give an account of their follow-up process Next >

10 Based on the results of this ‘internal mobility survey’, the HR teams will be able to jointly determine ﬁ rst, whether there is a need for Group-wide mobility programmes and second, what these programmes should look like.

Actions in the fi eld of ‘Continuing Education’ and ‘Career Development’ were also defi ned at RTL Group level. Romain Mannelli, Executive Vice President Human Resources RTL Group, said: “The measures taken following the 2010 survey have had a positive impact: for the fi rst time, more than 50 per cent of responses on the topic of ‘Training’ were positive. The HR departments of RTL Group join forces to continue their efforts in this area with the launch of the Learning Management System, which will facilitate access to training and development programmes by increasing transparency about the offer throughout the Group.”

The Learning Management System (LMS) is a web-based central platform for all training activities across RTL Group and Bertelsmann. It will not only offer training in the ﬁ eld of compliance (such as the latest Code of Conduct tutorial) but also encompass the training catalogue of the Bertelsmann Academy, and training offers from the individual Bertelsmann divisions, business units and local companies. It will also support trainings beyond conventional face-to-face instruction; for example, the system will offer ‘blended-learning’ programmes, which combine classroom instruction with e-learning modules.

11 BRITAIN’S GOT TALENT ENJOYS RECORD-BREAKING DIGITAL CAMPAIGN FremantleMedia United Kingdom

The latest season of Britain’s Got Talent enjoyed its best ever series in the digital space, with record-breaking downloads, interactions and attracting millions of views on its Youtube channel. United Kingdom – 12 June 2014

The app

The BGT app was downloaded 1.5 million times (a 40 per cent year-on-year increase) with nearly half a million of those for Android devices in the fi rst year it was available on that platform. User engagement was the big story of the year: on Saturday 7 June’s fi nale, 80 per cent of app users were actively engaged with the app; this refl ected the trend throughout the series.

On Youtube

The BGT Youtube channel made waves around the world, becoming the sixth most-watched channel globally and regularly appearing in the top 10 most viewed Youtube channels in the world throughout the series.

The channel has attracted more than 260 million series views App screenshot to date.

The most watched clip of the series was the audition clip of Bars and Melody, garnering 31.3 million views.

The Britain’s Got Talent Youtube channel

Next >

12 On social media

BGT once again proved to be one of the most talked-about shows in Britain. There was a 10 per cent year-on-year increase of Facebook likes rising to 3.3 million; and on Twitter, followers of @gottalent increased to 568,000 – a 12 per cent year-on-year increase. The show ﬁ nale was mentioned 700,000 times on Twitter peaking when Collabro were announced winners of the series, triggering more than 11,000 tweets per minute.

Kat Hebden, Head of FremantleMedia UK Interactive, said, “It’s exciting to see such a huge increase in levels of engagement across all our channels year on year and it demonstrates that digital activity around primetime entertainment programming is becoming more important than ever to audiences. We’re delighted with the results of this year’s digital campaign and look forward to bringing even more innovations to next year’s show.”

Britain’s Got Talent is co-produced by FremantleMedia entertainment label Thames and Syco Entertainment, for ITV.

In other FMUK news… Mel B revealed as fourth judge of The X Factor UK

An original Girl Power representative, Mel B – “Scary Spice” – completes this year’s X Factor judging line-up.

Mel says: “Honesty is the best policy – right? And that’s what I’m going to bring more of this year, whether it’s spotting an incredible singer, giving someone a reality check or debating with Simon over who’s got it wrong! I can’t wait to get started and find some amazing talent.”

The X Factor creator, Simon Cowell, back on the panel for the first time since 2010, says: “I am thrilled that Mel B has agreed to be a judge. I thought she was fantastic as a guest judge. She is feisty, opinionated and, I believe, will be a great mentor.”

Mel joins Simon, Cheryl Cole and Louis Walsh in the search for 2014’s X Factor star.

13 M6 WINS A PRIZE FOR A REPORT ON THE FAMILY LIFE OF GAY COUPLES M6

On 12 June 2014, the jury of the ‘Prix Média Enfance Majuscule’ awarded a Special Mention for a Documentary prize for the report on Zone Interdite: Papa et maman sont gays (Dad and Mum are gay), which aired on 27 January 2013 in prime time on M6. France – 17 June 2014

In this report, M6 focused on the family situation of children raised by homosexual parents. In France, between 40,000 and 100,000 children are being raised by gay or lesbian couples. Since the government decided to legislate on homosexual marriage, these children have found themselves at the centre of a political debate, with the question of their legal status dividing France. This report follows the daily lives of four children, Léo-Paul, Hortense, Lucas and Marion, who talk about their respective family situations.

In a press release, the channel stated: “Zone Interdite adopts an innovative approach to events and situations that are of interest to the French in daily life and sheds light on the lesser-known aspects of society. Its mandate is to show the world as it is and to tell the stories of men and women that encourage society to reﬂ ect on its values and destiny.”

Enfance Majuscule awards prizes to television programmes that have attempted to improve information and raise public awareness in the area of childhood and children’s protection. M6 previously received recognition for the quality of its reports at the 2013 awards.

14 Deadliest catch

On 16 June 2014, FremantleMedia North America (FMNA) announced they have become the ofﬁ cial licensing agent for Original Productions’ multiple Emmy Award-winning show, Deadliest Catch. The premiere off its landmark tenth season on 22 April 2014 on the Discovery Channel attracted more than 3.8 million total viewers, making it the day’s highest rated show on cable. SHORT NEWS 1/1

Les Ch’tis vs. Les Marseillais is a hit on W9 W9

The adventures of Les Ch’tis and Les Marseillais on W9 continue to register excellent ratings on DTT. Launched on 2 June 2014, this latest spin-off pitting W9’s two most emblematic teams against each other has gathered a wide audience of fans. France – 11 June 2014

RTL Radio Do Brasil RTL Radio

Celebrating the FIFA World Cup kickoff, RTL Radio in France switched to Brazilian time on June 12. 100 per cent Brazilian special programming, invited guests and music were scheduled from 16:30 (ET) until 01:00 night. France – 12 June 2014

Munchies lands in Germany UFA

On 12 June 2014 Vice Media and FremantleMedia / UFA announced the launch of their joint Munchies platform in Germany. Now available at Munchies.tv. Germany – 16 June 2014

Velvet now available for the blind Atresmedia

Thanks to the Audesc Mobile app, the Atresmedia hit romantic drama becomes the ﬁ rst ever series in Spain to launch its DVD and Blu-ray format with second-screen features catering especially for blind and visually impaired people. Spain – 18 June 2014

Wherever there is danger he will be there… FremantleMedia Kids & Family Entertainment

The most popular animated secret agent Danger Mouse bursts back onto TV to win over a whole new generation of fans, as FremantleMedia Kids & Family Entertainment announces the series’ return to television, on CBBC. United Kingdom – 19 June 2014

16 PEOPLE PEOPLE JUSTINE BEATRICE HUFFMEIJERN VEERASINGHAM RTL 5 FremantleMedia The Netherlands – 16 June 2014 United Kingdom – 17 June 2014

Justine Huffmeijer Beatrice Veerasingham

Justine Huffmeijer joined RTL 5’s programming FremantleMedia announced the promotion of Beatrice department beginning of June 2014. Veerasingham to Global Business Analysis Director, FremantleMedia, effective as of 16 June 2014. She will reinforce RTL 5’s programming team by taking up the role of Programme Coordinator. In this capacity Beatrice Veerasingham, FremantleMedia UK’s former she will help manage some of the team’s projects. In the Finance Director, has been promoted to the role of last four years, Justine worked for NET5 as Programme Global Business Analysis Director and joins the senior Director. Prior to this she was employed as a producer at management of FremantleMedia’s Group Finance among others, IDTV, Eyeworks and SBS. department.

Paul Cormont, Programme Director at RTL 5 In her new role, Beatrice is responsible for investment comments: “Justine has already a lot of experience appraisal, Group-wide analysis and business controlling. both as a programming professional and as a producer. She now reports to COO/CFO Sangeeta Desai for M&A For this reason I am so happy to have her on-board. She analysis and to Group Finance Director Mark Riddleston is a strong addition to the RTL 5 team. Besides, she is a on all other matters. great person to work with.”

17 More about Backstage

BACKSTAGE DAILY NEWS FROM ‘AT RTL GROUP, IS AVAILABLE ACROSS THE WE CARE’ IN THREE GROUP – DIRECTLY LANGUAGES IN YOUR INBOX

You can read In addition to the RTL Group is committed Backstage in your weekly newsletter we to effectively combine preferred language – offer to registered users business success with in English, German a daily newsletter socially responsible actions or French. available in three towards local communities languages. and to protect the environment. Visit the Corporate Responsibility news section on Backstage (CR news) and ﬁ nd out how RTL Group aims to improve the societies in which we operate.

backstage.rtlgroup.com backstage.rtlgroup.fr backstage.rtlgroup.de

For more information, don’t hesitate to contact the editorial team: [email protected]