Premiere Prepares To Launch New DTH Initiative
All systems are go for German pay-TV operator Premiere and its new Premiere Star subsidiary as the companies plan the September launch of the latter’s eponymous direct-to-home (DTH) offering.
Premiere announced July 3 that it had struck a deal with HypoVereinsbank, which saw the investment bank take a 10 percent stake in Premiere Star. The subsidiary was initially going to be called Premiere Sky but legal wrangles with BSkyB forced Premiere to change the name.
First publicized in March, Premiere Star initially will offer 15 channels via satellite plus pay-TV channels either not presently distributed via satellite or otherwise limited. The channels will be able to reach 1.7 million satellite subscriber households directly.
“Until now there hasn’t been a DTH platform in Germany dedicated to marketing pay-TV channels under a single umbrella,” said Premiere Star CEO, Wolfram Winter, a former NBC Universal executive. “Unlike with cable TV – take Kabel Deutschland or Unity Media for example – there was no satellite distribution based on a non-exclusive business model, and our new satellite platform is intended to fill precisely this gap. Demand among TV channels to be marketed via satellite is actually very high. We expect to see an annual growth rate of 200,000 subscribers, reaching a potential subscriber figure of 1 million within the next five years.”
With the established Premiere already among the main providers of pay-TV in Germany, time will tell how Premiere Star may mesh within its parent’s overall portfolio.
“Our new platform adds to Premiere’s premium strategy, supplementing the Premiere portfolio perfectly,” Winter said. “As there is a very obvious connection to Premiere … one can’t really speak of a separate brand. Actually, no other pay-TV brand in Germany is positioned as well as Premiere. This is a clear advantage for us, from which we will certainly benefit. I’m sure that the launch will further strengthen Premiere’s role as the leading pay-TV marketer in Germany and Austria and will make the digital pay-TV market more diverse.”
Premiere’s strategy is one of the more interesting approaches of any pay-TV operator in the major European markets. Already the main DTH provider in Germany, Premiere has teamed with T-Online to have a strong Internet Protocol TV (IPTV) strategy as well as inking deals to have its channels and bouquets available on German cable platforms.
“What you can see with Premiere at the moment is that they are following the strategy to try to get on every plane that is at every airport so they will not miss the one which is taking off,” Harald Heider, a media equity analyst at DZ Bank, said. “They are in the cable industry. They are in the satellite area. They are in IPTV. They are on Entavio. They are everywhere. So hopefully one of these will be really successful.”
Based on this strategy, Heider believes the Premiere Star initiative is a wise investment. “It is the right move for Premiere, and I don’t think it will cost very much for them to establish this service,” he said. “Premiere wants to collect all those small channels that they are not able to provide on their main DTH offering, and provide a platform to distribute those channels. Everything is in place so it can offer something to small companies who want to get their channels distributed via satellite. I know a lot of production companies who are interested in distributing their channels on satellite. They want to target certain groups. There is certainly an interest in the industry for having a platform like [what] Premiere can provide.”
Iris Schafer, a media equity analyst at Landesbank Baden-Württemberg was less optimistic. “Germany is a limited market for pay-TV,” she said. “It has always been a struggle in the past for pay-TV operators. I think the success of this model depends on the digitalization of the TV market in Germany. It is difficult to say how they will do. I think this is a good move for Premiere in terms of taking part in the digitalization process.”
While Premiere hopes to add 200,000 subscribers per year for Premiere Star, Winter believed it too soon to speculate about the financial performance of the DTH offering.
“It is too early to talk about profit and precise figures … (but) there are plenty of reasons why we are confident that we will be successful as a multi-channel DTH platform,” he said. “First of all, there is the size of the market; the variety of offers is increasing and more content providers are launching new channels. And when you look at the positive subscriber trends for basic tier channels in the cable sector, there is every reason to believe this success can be repeated with satellite TV.
The number of channels offered by Premiere Star likely will rise significantly in the long run, Winter said. “We are currently in talks with over 70 providers, and our impression is that more channels are coming onto the market every day,” he said. “For the time being, we’re planning to include some 20 channels in our portfolio. We are confident that the number will rise in the long run, but as you know, this is very much a question of capacities.”