Austria wants to grow own TV

Homegrown fare is budding, but German nets still king

Tiny but wealthy Austria has become the last frontier for a pack of German commercial broadcasters who see the Alpine nation as a potentially lucrative untapped market smack in the middle of Europe.

German broadcasters have been pouring across the border, buying up commercial TV licenses in Austria with an eye to creating new national networks.

Last year, ProSiebenSat.1, Germany's largest commercial broadcaster, acquired small Vienna-based regional channel Puls4 and is rebranding it as a national channel targeting female viewers. Josef Andorfer, former managing director of Germany's RTL2, has teamed with Teutonic publishing giant Burda Media to launch Austria9, a "classic" — read rerun — TV series channel.

And Herbert Kloiber's TMG — the first Germans in the door with the launch of Austria's ATV four years ago — are stepping up their commitment. Kloiber recently bought out its ATV partner, Austria's BAWAG bank, and has pledged to boost the channel's market share from its current, meager level of just 2.5% over the next two years.

All are looking for a share of the Austrian TV ad pie, estimated at about €600 million ($940 million) annually.

Currently, the bulk of those ad dollars go to powerful domestic public broadcaster ORF and to German channels such as RTL and Pro7, which are fed into the cable systems in Austria's bigger cities.

ORF's two national channels combined boast a 43% share of the national viewing audience. The German spill-over channels draw a further 49% of Austrian eyeballs.

The German channels have become so popular in Austria that the German networks produce a certain number of programs exclusively for Austria and have separate advertising windows for the Alpine nation, ensuring a significant share of Austrian ad revenues flow across the border into German pockets.

With these two powerful groups splitting Austrian ad revenue between them, it's hardly surprising that Austria's new commercial networks are having a tough time securing a foothold. Four years after becoming the country's first nationwide commercial TV network, ATV is stuck with a meager market share of just 2.5%.

But Austria9 managing director Conrad Heberling says that Austria's potential for growth makes it worth the risk. Unlike the sated German television market, Austria is still a neophyte when it comes to commercial TV.

"For that reason, Austria's 8 million potential viewers have become an attractive market," Heberling says. "We want a share of the roughly €200 million ($313 million) a year that go into the pockets of the German networks' Austrian advertising windows."

Katja Pichler, ProSieben company spokesperson, sees an opportunity in the digital spectrum. ORF monopolized Austria's analog wavelength, but "now, with digital, there are many more distribution options," Pichler says. ProSieben is modeling its new Austria channel on its successful female-targeted networks Kanal 4 in Denmark and FEM in Norway.

But Ludwig Bauer, ATV's newly appointed CEO, isn't worked up about the new German invasion. With a 4.5% share of the advertiser-friendly younger demographic, ATV is already far ahead of its newcomer competitors, Bauer says. Far from predicting a new gold rush, Bauer says expanding distribution and increasing advertising revenue at ATV will be a long, slow process.

"However, we consider ATV's position to be quite good already," Bauer says. "It took four years for ATV to get past the 4% market share in the key advertising-relevant demographic. The second generation of German commercial networks needed 10 years to do that."

The new channels may have an uphill battle convincing Austria's German-speaking audience to change their viewing habits, especially if they don't offer a real alternative to the German commercial channels on the dial.

"For the audience that is used to watching their favorite series on (German channels) RTL, ProSieben or Sat.1, there is no reason to change and watch the same series on ATV or Puls4 instead," one financial analyst said.

But ATV also has shown how clever homegrown programming, if done correctly, can draw audiences away from more expensive fare on ORF or the big German networks. ATV's "Bauer sucht Frau," a domestic adaptation of the U.K. reality format "Farmer Wants a Wife," taps into Austria's rural roots and draws audiences of up to 400,000 a night, an impressive figure in a country of 8 million.

Austria's new invaders will have to be similarly creative if they hope to establish viable national commercial television networks.

It won't be easy.