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Rebuilding ambition in television

By Eric Karstens

Published on September 8, 2009

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At this year’s Edinburgh International Television Festival, the CEO of RTL Group, Gerhard Zeiler, gave a speech about the current state of Europe’s commercial television industry. He summed up the situation early in his address: “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”. Rather than looking excitedly at overnight audience ratings and profits, Zeiler said, media managers today are fixated on maintaining the ability to pay back debts and stay in business.

Notably, Zeiler did not blame the Internet for the crisis of commercial TV, since he observed that people on average actually spend more, not less, time watching the tube. Instead, he diagnosed that mainly the television industry itself must be held responsible. The proliferation of ever more channels has increasingly fragmented the audience and consequently eroded the foundations of advertising revenue for each of them. Big incumbent TV chains, like Zeiler’s, used to take the bulk of the ad money. Now they are suffer proportionally most from that kind of competition. The financial crisis has only exacerbated this structural issue, and the general economic recovery hopefully to come will not change that.

Zeiler would not be the head of Europe’s leading broadcasting group if he did not have a recipe to cope with the crisis. Here is what he suggests:
• Television companies must radically save costs to the tune of another 10-20 per cent over what they have already been cutting since the year 2000;
• Advertising regulation should be further relaxed so that innovative forms of commercials can be introduced to television, i.e.: ad formats the audience cannot escape by fast-forwarding or switching channels;
• Free-to-air broadcasters should shift their most attractive programmes into pay channels to have the audience finance them directly, instead of via the indirect and unreliable detour of advertising;
• Broadcast television should find a way to commercially exploit their online video streaming activities more efficiently.

Obama RTL ad on a bus shelter, Lyon All this is not exactly new or original. Cost-slashing is rampant across the European media landscape. At the same time, the sector unwaveringly keeps trying to sell pay-TV as well as online on-demand services, yet very few (such as Sky in the UK or Canal+ in France) have managed to convince consumers to bite to an extent that the respective channels are actually commercially viable in the long run. And the call for unlimited advertising opportunities, while not entirely unwarranted, is as old as the business itself. The really interesting aspect of Zeiler’s speech is something else. He proceeds to make a case for consolidation, which is economy-speak for big companies swallowing the smaller ones and/or big companies merging. Since media concentration in Europe is already quite high, anti-trust and competition regulators would most likely object, but Zeiler suspects that the economic crisis might render them more lenient. Of course, a reduction in the number of channels would help the ones that remain standing, and Zeiler further suggests that there is “an opportunity to develop an industry-wide platform” for non-linear online TV, “where all the broadcasters take part”. This would indeed save costs, conveniently tighten the sector’s overall grip on the Internet (think of the oft-contested net neutrality paradigm, anti-piracy measures, the overwhelming position of Google and such), and put it in a position to more effectively sell online advertising. Zeiler’s Edinburgh foray coincides with news that Germany’s top four online marketing firms, including a direct RTL Group subsidiary and another RTL-affiliated company, are testing the waters to see whether it might be possible to form just such an alliance. Almost unnoticed by the public, much of the consolidation Zeiler envisions for the broadcasting market has already taken place among media agencies. Media agencies act as intermediaries between companies and the advertising media, bundling demand for ad space to achieve a better negotiating position, and implementing communication plans across the available selection of carriers. In the present unhealthy situation, an oligopoly of media agencies now can often dictate ad prices to broadcasters and website operators, or demand huge discounts. However, it is a quite different question whether the health of the market would best be restored by forming a counter-oligopoly. This is just another case where the political sphere, including regulatory authorities, puts high-visibility sectors such as the media proper under much closer scrutiny than others that fly below the public radar. What might instead be called for is a multi-dimensional evaluation of the media market that holds all stakeholders to the same standard. The European Commission’s Directorate-General Information Society and Media (DG INFSO) has recently made a step in that direction with its Media Pluralism Monitor. On the other hand, a multi-dimensional approach like this must also include content value in the equation. Zeiler said: “Some of you may say [saving costs] will rapidly reduce programme quality and thus audience shares, and I answer that this is not necessarily the case. We have plenty of examples all over Europe where costs are decreasing and audience shares are even increasing.” He then went on to criticise the narrow-mindedness of people who find shows such as “Big Brother” or “I’m a celebrity… Get me out of here” (which is not cheap, by the way) unbearable and even detrimental to society. It has frequently been argued that the effectiveness of advertising correlates with programme quality. Brand advertising in particular often plays into the target group’s ambitions to climb the social ladder. But when, as German media expert Norbert Bolz recently observed, television paints anti-social behaviour and gross manners as perfectly acceptable, the viewers’ perceived scope for self-improvement becomes limited. In such a kind of environment, brand advertising is therefore unlikely to thrive. What remains are commercials for sports bets, sex hotlines, astrology, and online poker games. Zeiler said it himself: “Yes, [programme quality] also has to do with money spent – but this is not the most important aspect of it. It’s about the attention to detail, the level of sensitivity and creativity that is applied and, again, the mindset that demands that nothing less than perfection is good enough.” I could not agree more, except that money definitely has something to do with what kind of attention programme creators pay to their products. The outcome is way different, depending on whether seasoned, well-trained professionals have plenty of time and resources at their disposal to complete a show, or whether some lone trainee gets to throw a programme together overnight. Money invested smartly in quality staff and quality content thus might just kill two birds with one stone: Make the cultural doomsayers finally shut up and re-attract big ad spenders at the same time. In the words of Gerhard Zeiler: “We need to challenge viewers with ambitious ideas that take us into new territories. We need to think in experimentation, we need to remain resolute in the face of failure and we need to risk all on our passion.” Photo courtesy of C.Farivar

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Eric Karstens is a consultant, analyst and author, focusing on media management, content and project development, strategy and media policy. Aside from working for German and international private and public-sector media companies, he is affiliated with the European Journalism Centre (EJC). Inspired by his many years as head of scheduling at the TV channel VOX, he published – among others – the standard reference Practical Television Handbook. Currently, the bulk of his work assignments is related to European Union affairs and to support and governance aspects of the public sphere.


Tags: advertising, edinburgh, gerhard zeiler, rtl group, tv industry,

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