RTL's Zeiler: Traditional media is back

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CANNES -- Gerhard Zeiler, the CEO of RTL Group and arguably the mightiest man in European TV, used the platform of the MIPTV confab to tell the industry that traditional media is back.

In his keynote speech opening MIPTV, Zeiler argued that despite the hype surrounding new online operations and the mega-deals signed for YouTube and MySpace, that the future of "yesterday's media" (broadcast television) is stronger than ever.

"In the last six months you have seen M&A companies increasingly attracted to traditional media companies," Zeiler said. He pointed to recent multi-billion dollar deals like KKR/Permira's buyout of German broadcaster ProSiebenSat.1, BSkyB's acquisition of U.K. free-to-air network ITV and the bidding war developing around Dutch format giant Endemol ("Big Brother").

This activity, Zeiler argued, was because traditional TV was a great business and is getting better.

"Most TV companies in Europe, with the exception of the UK, recorded record earnings in 2006," he reminded the MIP audience.

But Zeiler is no Luddite. He argued the digital revolution of Internet and mobile television is inevitable but that Europe's traditional TV companies are best positioned to take advantage of it.

"We should not be scared of technology. Internet TV, mobile, we see many of these are our competitors but these are all essentially distribution methods and distribution, in my opinion, is not our main business." Zeiler said. "Content and branding are our main businesses and in those we don't compete with these new technologies, we have to deal with them."

The big TV companies are the only ones that have the clout and capital to build global brands like RTL Group's "American Idol," Zeiler said, brands that will be essential as digital expansion further fragments the viewing audience.

"Fewer shows worldwide now can command an audience of more than 10 million viewers but those that do will be even more profitable," Zeiler said, arguing that big flagship channels will be able to command larger portions of the advertising revenue pie than their market share would suggest.

He pointed to RTL's French subsidiary TF1, which has a 35% share of the free-TV audience but 50% of the territory's ad revenue.

"If you look at the top 10 clips on YouTube, the majority are clips of TV shows or user-altered versions of those clips," he continued. "These new platforms need our content or they would be empty tubes."

But to succeed in what he called "My Big Fat Digital Future," Zeiler said television groups in Europe will have to form strong channel families of flagship networks with "fleets" of niche channels.

"Taken together, the flagship channels, the niche channels, VOD, DVD sales, mobile, the total audience for our content will grow," Zeiler concluded. "I think that shows for traditional media, the promises exceed the dangers of the digital future."
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