Territory report: Germany

Teutonic-American alliances continue apace

BERLIN — With the worst ad slowdown in a decade and stock markets seized by political uncertainty, local media companies are tightening their belts for a long winter.

In September, RTL saw a 27% drop in half-year earnings; company execs said there were no signs that an upturn would be forthcoming soon and warned that worsening ad conditions would take a serious toll on full-year core profits.

While the slump in Germany eased in August, when companies experienced only single-digit declines, advertisers have become increasingly conservative in the wake of the terrorist attacks in the U.S., says RTL CEO Didier Bellens.

Meanwhile, new alliances and ventures continue apace.

RTL is considering a stake in German financial news channel N-TV, which would help round out its Teutonic broadcasting holdings. Main rival Kirch Group launched its 24-hour news channel, N24, last year.

Kirch announced it plans to merge TV subsidiary ProSiebenSat 1 Media with its core holding KirchMedia by the end of 2002. With ProSiebenSat 1 already listed, the move is expected to speed up Kirch’s access to capital through a flotation on the German stock exchange.

Kirch’s financially troubled pay TV operator Premiere World, which is losing around $500 million a year, has been a coin drain for the company.

A helping hand may come from Liberty Media chief John Malone, who has said he may be interested in going into business with Kirch. Liberty is set to take over six of the nine regional cable system franchises in Germany — reaching around 10 million households — regulatory approval pending.

Even smaller players, like Viva Media, are looking for cover. Company has formed a 50-50 joint venture with AOL Time Warner that will relaunch the troubled Viva Zwei adult music web as a revamped channel early next year. Warner Music Germany already owns 19% of Viva Media.

On the production front, notes Martina Richter, co-CEO of media consulting group HMR Intl.: “All the major companies –Bavaria, Kirch and RTL –have launched entertainment divisions. They are developing cheap non fiction programs, docu soaps and adaptable formats.”

Germany
TV homes:36 million

Cable homes:20 million

Satellite homes:13 million)

Local programming:45%

Top show:weekly crime drama “Tatort” (18% share)

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