Disney Channel Expands Into Crowded European Kids' TV Market

The new German-language Disney Channel will be stocked with Disney series such as "Phineas and Ferb."

Children's TV hits new high in Europe as Disney plans bow of free TV network in Germany.

COLOGNE, Germany – The Disney Channel, which is set to bow a free-to-air version of its family entertainment network in Germany next year, will be entering a crowded market.

According to a study by the European Audiovisual Observatory released Monday, children's TV offerings have reached a record high in Europe, with some 320 channels targeting the kiddie demographic. This compares to less than 100 a decade ago and just 10 in 1995. The liberalization of European TV markets, and in particular the rollout of digital television services, is largely behind this explosive growth.

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Disney is already the leader in this pack, with 63 pan-European children's channels, compared with 44 for Nickelodeon, 29 for the Cartoon network and 21 for Turner Broadcasting System's Boomerang network. The vast majority of Europe's kids' channels -- nearly 300, according to the study -- are commercial operations, with only 21 public broadcasters in the group, including CBBC in the U.K., the German-language KIKA, France's Gulli network and SVBT in Sweden. Where they exist, however, the ad-free kids' public channels tend to be market leaders.

While digital television has been a motor behind the growth of European kids' TV, on-demand services targeting the younger demographic -- typically provided by pay TV operators such as Poland's Canal+ or cable companies like Numericable in France and Liberty Global's Telenet in Belgium -- are also on the rise.

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Disney is making a big bet that there is still plenty of demand in the market with its launch, in January next year, of a new free-to-air German-language version of the Disney Channel. Unlike the vast majority of commercial kids networks in Europe, the new German Disney channel will not rely on subscription fees but solely on advertising revenue. It will go head to head with three other free TV kids networks in Germany: public broadcaster KIKA, Nickelodeon's NICK network and market leader Super RTL, currently a 50-50 joint venture between RTL Group and Disney. It is still unclear whether Disney will hold on to its Super RTL stake and compete against itself or sell off its shares in the Cologne-based channel.

The German TV ad market has remained robust throughout the Euro crisis, making the territory an attractive opportunity for Disney. The Mouse House likely also sees potential for its consumer goods business in the huge German market.