Premiere relaunches looking for revolution

New CEO, new brand in place at German pay channel

COLOGNE, Germany -- Mark Williams may be British and Premiere may be a German pay channel, but for both July 4 will be Independence Day.

The date marks the rebranding of Premiere as Sky Deutschland, and CEO Williams and main shareholder News Corp. hope the relaunch signals the beginning of a revolution in Teutonic TV.

Sky has spared no expense for its relaunch party in Munich Friday night and VIPs including Samuel L. Jackson, pop star Katy Perry and boxing champ Vitali Klitschko were expected among the 700 invited guests.

But it's after the party that the real work will begin. Williams is trying what many before him have tried -- and failed -- to do: make pay TV work in Germany.

Despite being the world's second-largest TV market, Germany's pay biz is puny. Premiere, the market leader, has just 2.4 million subscribers, half the total of News Corp.'s Italian pay service Sky Italia, despite a much smaller potential audience. Pay TV penetration hovers around 15%.

Unlike other European markets, nearly omnipresent cable means German pay services have to compete with nearly 40 "free" channels. German viewers, the pundits argue, are unwilling to pay for more TV.

Williams has set out to prove them wrong. His goal is to break even by the fourth quarter of 2010 and book a profit in 2011. To make the numbers work, Sky Deutschland needs to add, and keep, around a million new subscribers.

It won't be easy. While Sky has plenty of top-end content, including the exclusive rights to Germany's Bundesliga soccer, it faces the challenge of getting viewers to shell out more just as the economic crisis starts to pinch. Sky will also have to fend off Deutsche Telekom, which is aggressively targeting Bundesliga fans with its own IP-TV service.

But much of the smart money is on Williams. Most analysts, including those from UBS, Goldman Sachs and JPMorgan, rate Sky a "buy." Since bottoming out in April at €1.3 ($1.80), the stock has soared, jumping nearly 37% to around €3 ($4.20) a share today. And Williams has put his money where his mouth is, shelling out his own cash to buy nearly 2 million Sky shares.