Europe’s oldest commercial tv operator has defied those who predicted that the market liberalization of the 1980s would signal the end of the road for Compagnie Luxembourgeoise de Telediffusion (CLT).
By mixing an aggressive television development policy with strategic divestitures, CLT has kept its head above water. Despite its own management predictions, the group has posted annual profits, albeit diminishing ones, throughout the last decade.
Now there are signs that CLT could be on the verge of an attempted expansion into British television to coincide with the 1993 reallocation of the ITV franchises. Bidding for the franchises closes this April.
“We have a choice between two formulas,” CLT managing director Jacques Rigaud told VARIETY. “Either we buy into a broadcasting company which we believe will have a good chance of having its operating contract renewed, or we bid for one of the other stations.” Rigaud indicated that the path chosen by CLT would become evident well before the April deadline.
While a British expansion is still up in the air, what is certain is that CLT intends to set up two new webs broadcasting from Luxembourg. Company prez Gaston Thorn recently announced plans to launch satellite service RTL News (inspired by CNN) and a second satellite-carried operation RTL-2 (devoted mainly to drama). Further details of the two projects have not been made available.
Consolidating and expanding
The indications are that with these projects in the pipeline, CLT is continuing a 10-year policy of consolidating its power base, and at the same time expanding into new territories. In addition, the company is slowly shifting a traditional reliance on earnings from widespread radio interests, toward a more balanced radio/television revenue split.
It’s not been an easy transition. Rigaud recalls that when he joined CLT in January 1980 the principal shareholders, financial group Bruxelles-Lambert and Gallic ad agency/communication group Havas, foresaw tough times.
“We anticipated a dip in radio income, heavy investment in satellite technology and a breakup of the commercial advantages we had enjoyed. I was told to expect at least two years of losses in the 1980s.”
At the time, CLT’s power rested firmly on its radio stations, especially in France. (CLT had started life in 1931 as Compagnie Luxembourgeoise de Radio and only changed its name in 1954 when the Luxembourg government granted it an exclusive tv franchise.) The company also benefited from a virtual advertising monopoly in Belgium’s French-speaking tv market.
Diversification became CLT’s watchword. The company already owned RTL-Television, which broadcast in French to Luxembourg, Belgium and the Lorraine region in northeastern France. In 1984 CLT set up Germany’s first private web, RTL-Plus. Originally designed as a satellite-to-cable channel, RTL-Plus now uses satellite, cable and over-the-air facilities.
In 1987, RTL-Television pulled out of Belgium, to be replaced by cabler RTL-TVI. Across the border in France, CLT took 25% of private web M-6; two years later, RTL-4 (formerly RTL-Veronique) started Astra satellite-to-cable broadcasts, with the Netherlands particularly targeted.
In a final move, Thorn and his team bought a 25% stake in Munich-based tv Tele-5.
Despite this expansion, predictions of two year-end losses proved to be unduly pessimistic. What happened was that in 1989, profits plummeted to $8 million (four times less than 1988) on group revenues of $597 million.
Radio makes waves
What saved CLT from real trouble was the unexpected strength of the radio sector and, in particular, RTL in France, which continues to account for two-thirds of all CLT profits.
Furthermore, the 1980s saw CLT scale back some of its non-broadcasting operations. A 90% stake in Paris-based tv distribution company Pandora was reduced to 50%. CLT sold 25% of its shares in Gallic tv producer Hamster and cashed in its remaining 5.56% stake in French cinema major Gaumont.
Although 1990 results are not due to be published until May, Rigaud says they will definitely be better than 1989. He claims the improvement is largely due to the fact that RTL-Plus has started making money, and M-6 has reduced losses and is expected to break even at the end of this year. RTL-4 should turn a profit sometime in 1992, according to Rigaud.
On the downside, the situation at RTL-TVI and Tele-5 remains uncertain. Touted to become a major money-earner, RTL-TVI has faced increasing competition from the mighty Gallic private network TF-1. “Our problem is keeping the network on breakeven,” reflected Rigaud. “Our Belgian partners from the written press see that television is taking ad income from them.” As for Tele-5, Rigaud reports operating losses and describes the future as “being very precarious.”
There have been other setbacks. In the second half of the 1980s, Jean Chalopin was called on to develop CLT’s production capacity making contacts with possible partners in England and the U.S. In 1990, however, the idea that CLT would enter directly into production was shelved as being too risky. That leaves the various group networks to buy the majority of their programming, especially fiction, on the open market.
Apart from Hamster Prods., which specializes in telefilms and soaps, CLT interests include shares in Intl. Film Productions and gameshow specialist Tele-Union. Because each of these is an independent company, CLT networks get no special deals on the production front. This has meant that until very recently, the webs did not buy programs from Hamster, considering them too expensive.