Pay-TV CEOs Warns of Changing Pay-TV Dynamics in Germany

[Satellite News – 5-27-08] Both Parm Sandhu, CEO of the Unitymedia Group and Michael Börnicke, CEO of Premiere, warned that pay-TV competition in Germany was changing and that this market, which had previously been very localized, would now become a battleground for international players. This was one of the highlights of the opening panel, ‘Networks, platforms and programmes, who dominates the digital world?’ at ANGA Cable in Cologne, Germany today. Sandhu led the calls for change. He said, “We have to face up to a different reality. These are not local markets anymore. We see the competition as Deutsche Telekom, Vodafone (Arcor), Telefonica (O2). These businesses have scale. I don’t know what kind of place there is a for a local city operator in that type of market. A lot of the thought leadership in these markets will come from around the globe. International capital will come into the German market. We are going through seismic shifts in the market.” Börnicke also spoke about how competition in the pay-TV industry in Germany was becoming more global in nature, and that pay-TV operators in Germany had to be less insular and more aware of global developments. Börnicke commented, “We are in the media market. We are in global competition. I think the key in the German market is to position ourselves in an international way.”

Influence Of Public Broadcasters

Sandhu then went on to question the influence of public broadcasters in the German market, hinting that they are stalling positive change in the digital TV market. He added, “The one thing that concerns me most in the market is the dominance of the public broadcasters (in Germany). Their desire to extend their influence beyond their competencies is a concern.” Unitymedia is a major provider of media and communication services via broadband cable in Germany. It also operates the ArenaSAT satellite platform in Germany, making it a multifaceted player in the German pay-TV market.

    Dr Andreas Bereczky, director of production at ZDF, one of Germany’s public broadcasters, unsurprisingly disagreed with this assessment and also said that public broadcasters content is very much in demand in Germany in the new digital world. He said, “Every day, every week, we get enquiries from new operators who want to have public broadcasters content. We did not contact them. They are contacting us.”

Lower Third

While Germany is potentially Europe’s most lucrative market for pay-TV, there is a sense it is being left behind by others. Sandhu, ironically the only non-German speaker on the opening panel, led the calls for for more innovation so that Germany can become a more prosperous digital TV environment. He said, “We need to have the energy to develop the market. Compared to other international markets, Germany is lagging behind. We are in the lower third in Europe in terms of digitalization. We need to have international investors, companies being able to merge in this market etc. We need initiatives, so that we are not in the lower third of Europe, rather than the higher third of Europe.”

Sandhu believes Germany is not helped by a complex regulatory environment, which is harming the progression of the digital TV market. He said “We welcome competition between different infrastructures. But, it has to be fair and even. We (the cable industry) are over-regulated. Who regulates Deutsche Telekom? Who regulates satellite? We are more regulated, which means there is less scope for investment and innovation. DT has enjoyed their DSL monopoly. The broadcast community has been a winner so they can preserve this outdated analogue world. There has been delayed investment. There is a lack of competition in the broadband and pay-TV market.”

Role Of Satellite

The role of satellite within the developing German pay-TV market was also brought into focus in the opening panel. SES Astra CEO Ferdinand Kayser, spoke about Entavio, SES Astra’s attempt to play more of a role in the digital TV market. However, the creation of this neutral digital satellite platform, which was launched last year, has not succeeded the way SES hoped, saying that its original plan for the platform would now have to be adapted. Kayser admitted, “In Germany, we have 16.5 million Astra households, 10.7 million are digital. We have done a lot of digitalization. We must offer different business models. We have found out two things from Entavio. Firstly, the cooperation with Premiere was very good, but not large enough to fund the Entavio concept. Secondly, it is very difficult to pursue a concept if not all stakeholders join in. We have had public or private TV operators who did not sit on the boat with us. We are reversing our course of action. We now have to adapt what we are doing.”

Sandhu also gave his verdict on Entavio, commenting, “It is very easy to set up digital platforms to offer digital services. The biggest challenge to migrate users is the marketing challenge. One of the reasons why Entavio did not succeed, is that there was not a natural partner to market.”

While SES plays a key role in the German pay-TV market, the lack of success for Entavio is a blow, and shows it is not easy make digital TV initiatives successful in Germany. However, Kayser was still bullish about SES’s prospects in Germany. He added, “As an infrastructure operator, we have a good position. SES Astra has a high number of homes, 16.7 million homes, and we have a technical link to these households. We don’t want to move into content. It is too late for us to do that. Our position is to be a technical provider of technical infrastructure. We want to invest in new satellites.”

The other main satellite player on the panel was Premiere, the pay-TV operator, which offers DTH services, as well as content packages, throughout Germany. The panel marked the first time new CEO Börnicke had appeared on the opening panel at ANGA. He was bullish about Premiere’s prospects for growth despite recent piracy issues. He commented, “We are setting the path for Premiere. We have all the content. We are flourishing and we will be returning to growth. We have had an issue with piracy, and we have had our problems. But, we are in the process of counteracting this, and have selected two encryption systems to help us counter this. So, we now have competition between the systems. Once the system is secured, we will have the highest growth rate in the company’s history.”