MTV Networks Europe CEO Ready For German Assault

Viacom’s acquisition of German media company VIVA Media will change the face of the youth entertainment market in Europe. The deal, which happened in June, saw Viacom acquire a majority stake in the German music television group for more than $368 million. The deal strengthens MTV Networks Europe (a Viacom subsidiary) significantly in Europe.

The two companies had been intense rivals across Europe, particularly in Germany. Brent Hansen, MTV Networks Europe’s dynamic CEO hailed the deal. “Our acquisition of VIVA Media is a significant development in MTV Networks Europe’s expansion strategy,” he told Satellite News. “Not only is Germany the second biggest multichannel TV ad market internationally, this deal will also enable us to enhance the diversity of programming available to German audiences by creating complementary yet distinctive MTV Networks and VIVA services. A big upside to this deal is that we’ll be able to increase our ad revenue by reaching a wider range of audience demographics through our expanded programming offer.”

MTV will be adding such established channels as VIVA and VIVA PLUS to its arsenal of channels in Germany.

The merger still has to be approved by the German regulator. In terms of any structural changes to MTV Networks Europe, Hansen commented, “As far as the new structure goes, the integration committee will be formed only following regulatory approval of the 14-shareholder agreement. In the meantime, the companies will continue to operate independently. Timing of the approvals is up to various authorities in Germany, and it could take anywhere from one to four months.”

Market Environment

Satellite pay-TV plays a crucial role in Germany, with Premiere boasting some three million subscribers. In recent months, Kabel Deutschland acquired three other German cable operators, thus strengthening its position. The German digital TV market has huge potential, and the combination of MTV and VIVA is likely to be in a strong position to take advantage if there is a resurgence in the market.

Traditionally, Germany has been a strong Free-To-Air (FTA) market, and pay-TV operators have struggled in recent times. However, despite this, pay TV is still Europe’s biggest market and offers revenue potential for channel providers.

It is a difficult market for content providers at the moment, particularly in terms of advertising. VIVA Media’s CEO Dieter Gorny recently told Satellite News’ sister publication Inside Digital TV, “The TV advertising market will recover on a step-by-step basis, and the main growth is expected to materialise in the second half of 2004. At the moment, we are facing a difficult market environment, from which we expect to recover slowly. Sustainability of growth cannot be projected accurately at this moment in time, and visibility in the market remains low.”

Other Challenges

The challenge for MTV Networks Europe will be to continue to build its impressive brand across Europe. The company has come under intense competition in the UK, where satellite pay-TV operator BSkyB has launched a series of music channels to put the heat on MTV. The UK market has seen a number of music channel launches in recent years.

Despite this, Hansen remains confident that his company will maintain its leadership position in the UK market, and that a number of the new channels will simply disappear. He said, “We believe we are able to make money on the whole of our network, and we will continue to invest in creative content as well as editorial content. I don’t think we have seen any creativity in the music space outside of MTV. No one is spending the time to try and create imagery and unique perspective. You are either copying MTV or you are MTV. We have to continue to invest more and create, rather that cut costs. In the end, I expect a lot of these players to go away. I can’t see there being any more channels. I think this time next year there will be fewer channels.”

Yet, while the company is hoping to fend off the challenge of numerous music channels across different platforms in Europe, plotting future revenue growth is more difficult. The company is unlikely to launch a series of new channels.

“We have stopped launching lots and lots of channels because we have got the dynamic we wanted too. The initial challenge was to consolidate the big three markets in Europe,” Hansen admitted. “We want to give more control to our major markets so they can be more nimble. We also want to build markets like Spain and France, and get our channels to a higher level.”

The key will be to diversify and develop the MTV brand across different platforms — like mobile and broadband — to complement the traditional TV strategy. However, despite ratings improvements, Hansen is unsure whether the increases are due to its presence across other platforms.

“The audience is able to tap into us more regularly. As our numbers across Europe have grown ratings wise, as well as revenue wise, it could be the multi-platform stuff that is affecting it,” he commented. “But it is more likely that it just keeps our brand alive outside of the time that people spend watching TV.”

While the company will continue to look to be innovative in the broadband and mobile arena, winning in the TV space will remain key. “The TV space is where peoples’ eyeballs will be in the foreseeable future. I have yet to see loyalty in terms of the Internet in a way you see on television, Hansen said. “The perception of winning in the TV space is actually greater at the moment. You can score all sets of victories in broadband, and it is a wonderful medium and opportunity, but I certainly do not think people go to that space with the same degree of loyalty.”

–Mark Holmes

(Polly Stevens, MTV Networks Europe, e-mail Stevens.Polly@mtvne. com; Christiane Mayr, VIVA Media, e-mail [email protected])