RTL CEO speaks at Edinburgh TV fest

EDINBURGH — European free-to-air private webs must adopt a pay strategy or their businesses will shrink further, insisted RTL Group CEO Gerhard Zeiler.

Zeiler, giving the Worldview Address at the Edinburgh Television Festival Aug. 29, said that as ad revenues continued to plunge, networks need to launch subscription-based services.

“Every major free-to-air commercial broadcasting group will need a pay strategy,” he said. “Some program offers will switch from free-to-air to pay TV, and on the other hand, we will see the development of new pay channels from what so far have been pure free-to-air media companies.

“It will follow a quite simple logic: If the ad industry doesn’t pay every single bill anymore, then the consumer, directly or indirectly, will have to step up.”

Last week RTL, hit by declining revenues in all its significant markets, announced a net loss of $150 million for the first six months of the year.

Zeiler surprisingly said that the reduction in advertising coin was not caused by revenues migrating to the Internet. Instead he blamed the proliferation of multichannel digital TV across Europe and the consequent weakening of ad rates. Zeiler argued that a “slightly recovered economy” would not alter this basic reality.

He predicted that digital webs offering nothing but repeats would decline rapidly as most of these services would be available free online.

In their place broadcasters needed to launch “more targeted thematic channels” offering original fare.

Zeiler, in what was widely regarded as one of the most considered and constructive speeches delivered at the three-day talking shop, said regulators must allow European webs to form alliances allowing them to offer new video-on-demand services.

He said: “To make a business out of the growing nonlinear TV habits of our viewers is one of the most important factors that will determine whether we will have a shrinking or a growing TV industry in the future. We simply have to get that right.”

Zeiler warned that further cuts were necessary as European free-to-air webs needed to “significantly” reduce the costs of their core businesses.

“When I say significantly I do not mean 3% or 5%. I mean at least 10%, if not 15% or 20%,” he said.

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