GlobeCast CEO Eyes Up Asian Opportunities
GlobeCast recently bought its WorldTV service to Europe, as the content management company is hoping to tap into the demand throughout the continent for more diversified ethnic programming.
The service, launched at the end of May via the Intelsat 905 satellite, initially featured a bouquet of seven South Asian channels. The bouquet now features 12 channels, occupying a full transponder on the spacecraft, said GlobeCast Chairman and CEO Christian Pinon. GlobeCast is looking at adding more channels and more transponders and is discussing expansion possibilities with Eutelsat, he said.
GlobeCast already has been successful with World TV in the United States, where it delivers more than 200 international TV and radio channels to customers. The company, a France Telecom subsidiary, also is looking to derive more revenues from the Asia-Pacific region, but Pinon admits this is a difficult task and may require GlobeCast to make an acquisition to reach its revenue goal.
In an exclusive interview, Pinon discussed the company’s growth prospects around the globe.
Satellite News: What are the major strategic opportunities and challenges for the company throughout the next 12 months?
Pinon: We used to be a satellite distributor, and now we are a content management company. We are not planning any strategic moves. We just want to grow a lot and basically grow in a profitable way. We want to add more value-added services to the historical transportation layer. We went through some difficulties in the [United States]; we have recovered there. We have also some significant growth in Asia, almost 30 percent per year. We are also seeing some strong development in Eastern Europe and the Middle East.
We are also step-by-step evolving in our business model with new innovative services to bring value to our classic transportation business. So basically, IP (Internet Protocol) services for contribution and new ways of distributing content to remote locations. All that remains today marginal, but hopefully we are at the beginning of a very fruitful story, which is the real transformation of GlobeCast.
Satellite News: Which markets in Europe do you believe offer you the strongest opportunity for World TV?
Pinon: From the [United States] we know there is a huge market for bringing content into the market to serve people with different ethnic backgrounds present in each country. As for Europe, there are obviously many non-European channels available on satellite, but we wanted to move one step beyond that and provide a full service. This means operating a bouquet. Obviously, our main skills are not in the fee part of [the business-to-consumer] chain. We organized our World TV Europe — subcontracting totally the subscriber part of it. We can provide the full service, but instead we are looking to operate the [business-to-business] part of it. We are going into Europe with Asian channels. We uplink these channels on the satellite and then provide potential subscribers with the addresses of distributors in each main country in continental Europe. From these distributors, subscribers can get the encryption system and things like that. It is a simpler business model for us. It is less risky. At the end of the day, it will bring the total value chain to the customer.
Satellite News: Do you see the dynamics of the TV market in Europe being different from other markets where World TV is present?
Pinon: Europe is a more fragmented business. You simply cannot deal with one distributor across different countries, so we have to organize things country by country. Asian minorities are less present in Europe than they are in the [United States], so it is a more fragmented content. We have to bring good content matching where the subscribers are if we want to be successful. It is a very specific approach and we have to get to a good percentage of subscribers in order to be a success. I would say that Europe is a more difficult market, but with our background in the [United States] — where we have 10 years experience — we have a professional way of approaching this business. We are very confident and in the first few weeks since the service launched, subscription take-up has been promising.
Satellite News: When would you expect World TV to be profitable in Europe?
Pinon: In terms of profitability, we are currently mixing two business models, transportation and the pay channels. We can balance the transportation business model with some upside and some risk on the subscriber part of it. For us it is not much of a risk, as we share this with the broadcasters. World TV is partly linked to the transportation model and partly linked to the success of the bouquet itself. … We would expect to be profitable with World TV Europe by 2009.
Satellite News: Do you expect to add significantly to the channel line-up over the next 12 months in Europe?
Pinon: We are currently negotiating with broadcasters in different countries, so I can’t really tell you any names. We started with Indian channels, and obviously, Asia is more than just India and more than just the Indian sub-continent. … When you consider [that] within less than one year we have filled one full transponder with Indian content, we think we can fill up another two transponders dealing with Asia.
Satellite News: In 2006 you unveiled a deal with Verizon so their Internet Protocol TV (IPTV) subscribers could have access to World TV channels. Are you looking to do other deals with telcos?
Pinon: Yes, there is an IPTV opportunity for GlobeCast. With our relationship with our shareholder France Telecom we have been quite innovative in bringing content to telcos and capitalizing on this experience. We are trying to export this expertise, especially to the [United States, where] generally speaking, TV on fiber-to-the-home is something that has just been launched but which is not as mature as we can see in places like France. We have a very good cooperation with Verizon, but we have not yet launched World TV on Verizon’s network. These are reasons for Verizon to discuss. It will happen, probably at the end of the year.
For us, as a content manager [and] aggregator, opening to our customers new markets like IPTV in the [United States] — on top of being present on World TV with more than 200 channels — is a way of serving our customers. Obviously, there is less value-added [service] in the process when we bring the content to the gateway of the telco. There is more value add to the customer as thanks to GlobeCast, they will get a satellite solution [and] they will get a cable solution as well as a telco solution. Our objective is to become a gateway for broadcasters who want an efficient distribution of their content.
Satellite News: What progress have you made toward your goal of increasing GlobeCast’s percent of revenues from Asia from 5 percent of total revenues to 20 percent?
Pinon: We are growing significantly in Asia. Last year, we had 28 percent growth in Asia. But when you start with [about] 5 percent [and] grow around 30 percent a year every year it is still a relatively low percentage. So to answer your question bluntly, we are still far from reaching this objective. What does that mean? It means that internal growth is at 30 percent, which is difficult to manage. It is not enough to deal with the Asian challenge. So now we are considering potential acquisitions and partnerships in this region to spur our growth.
In a nutshell, 20 percent of overall revenues coming from Asia has to be our objective. We cannot be a global company if we are not a significant player in Asia. We will never reach this figure with internal growth because it will take too long. So we need a kind of balance between internal growth and external growth.
Satellite News: Would you expect to make an acquisition in Asia before the end of the year?
Pinon: I am not sure if we would be able to do it this year, but we are carefully considering some options. It is also up to our shareholder France Telecom to follow us. We have a good knowledge of Asia, and we know there is huge potential there. It is not rocket science to get to this conclusion. We know that being alone and even growing in a spectacular way will not be enough to get to our goal. We have to find solutions and working on different ways of reaching that.
Satellite News: How would you assess your performance in the United States?
Pinon: GlobeCast America went through some very difficult years. All that led us last April to start a complete restructuring of GlobeCast America, which led us to close our Miami operations. That was a big part of the company. We had to significantly streamline the company just to get back to profitability. But squeezing costs was not the only option. We also prepared the future with some strategic growth. We also partnered with HBO Latin America in Florida, which means we use their premises to grow our business in Latin America. We are a supplier of HBO, and from there we can serve our customers and have a playout facility and this is a key development for us.
As for the domestic market, we have to look to offer new services. We are quite pleased with the contribution business, but this is not enough. The main challenge for us is to grow our presence in the domestic market. Importing content thanks to World TV has been a successful story for us. Exporting content is a more recent story, and we are looking to bring more innovative services to broadcasters and that is challenge for us in 2008.
Satellite News: What impact is high definition (HD) having for GlobeCast?
Pinon: The take-up has been slower than expected, but there are symbolic events in HD. For example, you have the Tour de France, which GlobeCast is the historical partner of the Tour de France, and we transport the content in HD. It will be the same for the Beijing Olympics. We can say that HD is very related to sports, and with GlobeCast, very related to the contribution business. Can we conclude that HD has significantly changed the scope of the satellite industry? I would say not yet. I would be a little bit cautious.
Satellite News: How do you see the satellite/telecoms landscape changing over the next 12 months, and where would you like to position GlobeCast on that landscape?
Pinon: I am not a strong believer in IP via satellite. I am not a strong believer in telephony via satellite except for some niche markets linked to an Inmarsat type of business. I can’t see anything outside of TV. So in terms of TV, it is good and bad news. Point-to-point contribution via satellite is very much at risk. Point-to-point contribution for transportation is also at risk. Anything that is point-to-point is very much at risk. Distribution of content to the end user is still a good business if you observe the trend of more and more long-term TV channels. There are more and more TV channels available via satellite. You have the relative effect of HD and better encoding systems. If I were a satellite operator, I would be very selective with my orbital slots so abandoning some orbital slots and being more of an asset manager [and] having a pure financial perspective so that I can optimize my investment. I would be very pragmatic. I would avoid being a dreamer on new and exciting stories for satellites. I would be quite conservative. The future is on the ground.