Anyone looking for proof of the emphasis U.S. media companies are putting on international markets need look only to a vital hire Turner Broadcasting System made earlier this year. The company took particular pride in announcing that Gerhard Zeiler, then the CEO of RTL Group, Europe’s largest broadcasting company, would be joining the company to run its international division.
“Gerhard is probably the most respected broadcasting executive in Europe today,” says Jeffrey Schlesinger, president, Warner Bros. International Television, who has known Zeiler for over 20 years. “It sends a real message that Turner and Time Warner are serious about expanding their channel portfolio internationally.”
Just how serious was apparent during the February 2012 earnings call for Time Warner’s 2011 results, when chairman and CEO Jeffrey Bewkes listed international expansion as one of his four key strategic priorities for 2012. He also reiterated the company’s goal of producing $1 billion in operating pro ts from its international networks by 2014.
That will take work. In 2011, the combined international operations at Turner (which Zeiler now oversees) and the separately managed HBO channels had about $3 billion in revenue and $650 million in operating profit.
“We have a very strong international business, but our aspiration is to take it to a whole new level over the next couple of years,” says Phil Kent, chairman and CEO of Turner, who spent several months recruiting Zeiler for the job of running more than 130 channels in over 30 languages in about 200 countries. These include local, international versions of Cartoon Network, TNT and TBS as well as the business operations of CNN outside the U.S. and Turner’s international joint ventures.
Austrian-born Zeiler got his rst major TV post running his country’s public broadcaster ORF in 1986 and has since run a number of broadcasters. From 2003-2012, when he joined Turner, he headed up the RTL Group, which currently owns 52 TV channels in nine countries, along with the famed global production company FremantleMedia.
During that time, he also established a reputation as both a consummate programmer— in 2011 he became the rst person from outside the U.S. to win NATPE’s prestigious Brandon Tartikoff Award —and as a savvy executive. During his tenure at RTL, the company increased its earnings before interest, taxes, depreciation and amortization (EBITDA) from €487 million ($631 million) in 2003 to €1,134 million ($1,470 million) in 2011.
“Gerhard has a unique set of skills in that he is a creative guy who is really good with numbers,” says long-time friend Mark Kaner, president of Twentieth Century Fox Television Distribution. Zeiler admits the decision to leave such a powerful post at the RTL Group wasn’t easy. “It wasn’t an overnight decision,” he says. “I loved the job but I think I simply wanted another challenge.” In the new post, Zeiler stresses that his strategies for ramping up Turner’s international channel business will vary by region. But one key priority will be expanding the international reach of its entertainment brands, first TNT but also TBS.
“TNT is very strong, our strongest channel in Latin America, and we have a good TNT business in Spain, German and the Nordics… but I want to see TNT in more countries,” Zeiler says.
Zeiler is also looking to make more investments in free-to-air channels. Turner already has a free-to-air channel Chilevisión as well as some ad-supported kids channels, but both Kent and Zeiler note they are looking at more free-to-air services as part of a larger push to increase their ad revenue.
“In Europe and Asia, subscription revenues are much higher than ad revenues and this is one reason why we are looking a little more at free-to-air,” Zeiler says.
Another priority will be multiplatform TV Everywhere deals with operators. “The major platforms are coming to us and saying they want to launch their own SVOD services so they are ready when Neflix, Hulu and Amazon come to our markets,” Zeiler says. “It will take a few years, but we see this becoming the standard way of doing things.”
Some of these market shifts will create challenges for Turner’s international growth plans. Western European markets are in the midst of an economic funk and operators around the world are seeing increased competition and rising programming costs, which is pushing them to offer less expensive packages. “Smaller packages mean that you have to have really strong brands and channels if you want to stay in these basic packages,” Zeiler says.
To bolster their appeal, Zeiler plans to ramp up original production, which has long been his favorite part of the TV business. During his years at RTL, Zeiler would often watch 50 to 100 hours of local television before making a major investment in a new territory and he is taking a similar approach at Turner.
“You can learn so much about a country and its culture by watching local TV content,” he says. “That is the fun of this business.”
Kent also says Zeiler has worked to decentralize some operations so that local market executives have more control over their operations and that his enthusiasm for TV programming has already energized company programming executives.
“The middle- and upper-level executives love having a president like Gerhard who can talk to them about programming,” Kent says. “Most people who run these international operations come from af liate relations or advertising or business development. But I felt we needed someone at the top like Gerhard who is a true programmer.”
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