TV Europe DISCOP 2011

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Special Report: Novelas in Eastern Europe

DISCOP EDITION

THE MAGAZINE OF EUROPEAN TELEVISION

TVN Group’s

Markus Tellenbach

JUNE/JULY 2011

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Artear www.artear.com

Left on the Shelf

• The Social Leader • Left on the Shelf • Be Kind to Me • Methods • Tasting Notes

A division of the Argentinean media conglomerate Grupo Clarin, Artear built its international sales business on the back of novela hits like Gypsy Blood. But the company has been letting buyers around the world know that it has much more to offer.

New at DISCOP is the 26-part series The Social Leader, about a community activist. Artear will also continue to showcase the series Left on the Shelf, about three spinster sisters who lean on each other following the death of their harsh mother, and Be Kind to Me, about a couple’s struggles to stay together after 22 years of marriage.

On the unscripted end, meanwhile, Artear has the 13part documentary Methods, charting the creative processes of artists, musicians and writers, and Tasting Notes, with 57 half-hour episodes entirely focused on the world of wine, hosted by the Argentina Sommelier School’s director, the renowned expert Marina Beltrame.

The Social Leader

Caracol Television www.caracolinternacional.com • The Witch • Yellow Team • Love and Fear • The English Teacher • Confidential

Caracol Television experienced a considerable increase in demand for its productions in Central and Eastern Europe last year, reports Camila Reyes, the sales executive for the region. “We believe this is based on Caracol’s constant growth and success throughout the last few years, both in the Latin market as well as on the international arena.”

At DISCOP, highlight offerings include the series The Witch, about a school teacher who finds she has mystical powers, and Yellow Team, focused on a group of cabdrivers. Reyes is also looking forward to talking to her clients about Caracol’s new co-production with Sony Pictures Television, Love and Fear. The English Teacher is a new telenovela that Caracol is showcasing at the market. Rounding out the list of highlights is the drama series Confidential.

“We believe DISCOP will be a great platform

for us to create new demand, close new deals with our current customers and increase the international awareness of our productions.

”

—Camila Reyes The English Teacher

IN THIS ISSUE Novelas Flying High Latin American novelas remain strong across CEE Interviews TVN Group’s Markus Tellenbach CME’s Adrian Sarbu

Get daily news on European television

by visiting www.tveurope.ws

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Imagina International Sales www.imaginasales.tv • The Boat • Ermessenda: The Queen of Kings • Fish & Chips • The Gonzalez • 25 in 25

Ricardo Seguin Guise

Publisher Anna Carugati

Editor Mansha Daswani

Executive Editor Kristin Brzoznowski

With its broad catalogue, Imagina International Sales covers a wide range of genres for the buyers at DISCOP. “High production quality, original concepts and great audiences in Spain make it easy to choose from [our productions],” says Barbora Susterova, sales executive. Leading off the slate is The Boat, which Susterova describes as “a mixture of adventure, mystery and drama, set on a 70-square-meter deck of a boat.

With an average of 20-percent share [in Spain], this original and brand-new concept makes the series attractive to many buyers across all Europe.” Imagina also has high hopes for Ermessenda:The Queen of Kings, a historical drama. Fish & Chips is a game show, while 25 in 25 is a quiz show. Other highlights include the clip series The Gonzalez and the feature film 3 Meters Above the Sky.“Imagina International Sales has established contact with most of the CEE buyers during its existence; we are working with TV channels directly as well as with production companies all over the world.”

The Boat

“The goal for this market is to establish new

contacts, strengthen existing relationships and promote our catalogue in each one of the territories.

”

—Barbora Susterova

Managing Editor Morgan Grice

Editorial Assistant Simon Weaver

Art Director

Televisa Internacional

Cesar Suero

www.televisainternacional.tv

Online Director Phyllis Q. Busell

Sales and Marketing Manager Terry Acunzo

Business Affairs Manager Alyssa Menard

Sales and Marketing Coordinator

Ricardo Seguin Guise

President Anna Carugati

Executive VP and Group Editorial Director Mansha Daswani

VP of Strategic Development TV Europe © 2011 WSN INC. 1123 Broadway, #1207 New York, NY 10010 Phone: (212) 924-7620 Fax: (212) 924-6940 Website:

www.tveurope.ws

“We are very enthusiastic. For us, DISCOP has

• The Power of Destiny • With You, Without You • Double Life • Little Giants • Legacy of Revenge

always been a great market; we have time to be with clients, to get to know what their needs are.

”

—Claudia Sahab

A prolific provider of telenovelas to Central and Eastern Europe for years,Televisa Internacional has recently found success in the region with an entirely different genre: light entertainment. Its variety format Dancing for a Dream has been adapted in several markets, including Romania, where it is in its eleventh season.

Televisa hopes to follow up that success with Little Giants, another variety format, this one focused on talented kids.

“This will be one of our big bets at DISCOP,” says Claudia Sahab, director for Europe. “It’s a big entertainment format for prime time. It’s great for the whole family.The [ratings] in Mexico have been amazing—every week it’s growing.”

The novela, however, is still Televisa’s bread-andbutter business in CEE, and Sahab will be showcasing The Power of Destiny; With You, Without You; and Legacy of Revenge, among others. She will also be introducing Double Life.

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Little Giants

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Novelas Telefe’s Superclumsy.

Flying High Despite stiff competition, Latin American distributors are still finding avid interest in telenovelas across Central and Eastern Europe.

By Mansha Daswani At the heart of almost every good telenovela is a story of struggle and redemption. So it’s fitting that the companies charged with selling these Latin American soap operas have encountered their fair share of obstacles—and have emerged unscathed. The genre has managed to secure inroads across Asia, the Middle East, Africa and much of Europe, and while it may occasionally fall out of style, the novela has proven to be a resilient programming staple on broadcasters across the globe.

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Central and Eastern Europe (CEE) is no exception. Since first taking hold in the region’s early days of commercial broadcasting, when new channels were anxious for costeffective content, the Latin American telenovela has remained on local buyers’ wish lists, both as completed programming and as formats.

“Last year we saw huge growth in [our business in] Europe,” reports Claudia Sahab, the director for Europe at Televisa Internacional. Stressing the production values of 6/11

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Lady in waiting: Love and Fear, a co-production with Sony Pictures Television, is among Caracol’s novela offerings for DISCOP.

Televisa novelas, Sahab notes, “In some cases there were two or three clients competing for the same title.”

Having secured first-option output deals in virtually every market in CEE, Televisa has recently inked second-option pacts with networks in Croatia and Hungary, a trend Sahab is optimistic will continue. “There are more channels now; almost all the main channels have smaller DTT channels.

They will need more content. For us, that’s good news.”

tiny; With You,Without You; Legacy of Revenge; and the upcoming Double Life, which launches in Mexico on Televisa’s flagship terrestrial channel this summer. History has shown, Sahab says, that the novela is more than capable of making a comeback.

“Hungary has been incredible. The telenovela genre was out of the market for about four years. For the last two years, you can’t imagine how [much] we have been growing there.

We started with pay TV, from there on other [broadcasters] started to see that the telenovela was successful. So they started to demand our products, and now we’re all over Hungary.”

Hungary is also on Caracol Television’s hit list of growth opportunities in the region, says Camila Reyes, sales executive for CEE at the company. Poland, Romania and the Czech Republic are also territories she’s targeting, while building on a strong business in Serbia and Bulgaria.

“We have seen a considerable increase in demand for our products,” Reyes says, listing hits like The Cartel 2, Mafia Dolls, Family Secrets and Mariana & Scarlett. “We believe this is based on Caracol’s constant growth and success throughout the last few years, both in the Latin market as well as in the international arena. Also, the high quality of our productions, our worldrenowned cast and the high profile production partners with which we collaborate, such as Sony Pictures [Television], are just some of the factors that have contributed to this increase.”

Globo TV International has clinched a number of deals in CEE recently, including on the new version of the telenovela The Clone, which was picked up in Lithuania on TV3, TV4 in Hungary, Pink TV in Slovenia and Serbia, TV Puls in Poland, and RTL in Croatia. India: A Love Story aired this year on MTV in Hungary, Mreza Plus in Bosnia and BNT in Bulgaria. New novelas from Globo at DISCOP include Cat’s Cradle, Written in the Stars, Passione and The Buzz.

THE COMEBACK KID

Adela Velasco, who handles sales to Europe and Africa at Comarex, is similarly upbeat. “These regions are all moving back again to acquiring and broadcasting telenovelas, which of course is our ‘star’ product,” she says. “We are fortunate to have [had] a constant presence in this region.” She lists the Azteca novelas Morena and Daniela as among the company’s hits in this part of the world. “These novelas, with their unique scripts, offer universal themes such as family values, love and revenge, which people can identify with. Audiences love the romance and intrigue.”

Nevertheless, it’s been a challenging few years for content sellers of all stripes in CEE, with the downturn in ad budgets having put the squeeze on broadcasters’ programming spending.

Michelle Wasserman, the head of international sales, programming, formats and international production services at Telefe International, concedes that there has been a slowdown in the acquisition of completed telenovelas in some Eastern European markets. “They are still buying from us, but not as much as they were in the past,” she says.

Televisa’s Sahab says that the genre has been absent from the Czech Republic for several years, and she’s eager to crack the market again with a DISCOP slate that includes The Power of Des42

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A passionate period: Band is showcasing its lineup of Brazilian content, including the telenovela Forbidden Passions.

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Cutting through clutter: Among the shows being sold by Artear is Gypsy Blood.

While celebrating CEE’s renewed verve for novelas, Latin American content sellers are keeping a keen eye focused on the new competition—notably daily dramas from Turkey and, to a lesser extent, at least for now, Korean soaps.

“There is a high demand for Turkish series, which are very successful, especially in Kazakhstan, Bulgaria and Macedonia,” says Melissa Pillow, the sales director for CEE at Telemundo Internacional. “These series are not labeled as telenovelas; however, the broadcasters consider them similar to the traditional Spanish-language counterpart.These series are not new and have been on the market for more than two years. However, in the past year, broadcasters in more countries, such as Hungary and Croatia, have begun experimenting with them.

These series do not seem to be replacing the slots of the Spanish-language titles. However, we are seeing that the time slots have been moved in some cases to make room for the Turkish series as well.”

“There is no small competitor,” asserts Televisa’s Sahab on the rise of the Turkish soap. “We have to be very conscious about this.We are paying a lot of attention to what they’re doing and how they’re doing it and why those titles are working.”

to offer up both a canned production and a format, says Reyes: “We focus on providing clients with exactly what they need. Each territory is different and, according to budgets, production capabilities and many other factors, we help clients acquire what fits their need best. Either it is the finished products or the format rights.”

Indeed, it’s the format market in CEE that has proven to be particularly lucrative for Telefe, reports Wasserman.

“The request for the formats had been growing a lot while the ready-mades have been on hold for a while,” she says. “We have just produced The Successful Mr and Mrs Pells for Russia and are now getting into the adaptation of A Year to Remember.

We are still working hard in Hungary; we are doing a lot of development in Poland. We are starting preproduction for The Successful Mr and Mrs Pells [in Poland], and we are in the adaptation process of Don Juan and His Fair Lady. We have more projects in terms of production rather than ready-mades.”

There are, however, several completed productions that are generating business for Telefe, including the teen-targeted series Superclumsy and TeenAngels.

Telemundo also emphasizes its ability to offer both completed programs and novela formats. “However, in most of Central and Eastern Europe, sales of completed telenovelas are still our main business,” says Pillow. “Our title Beautiful but Unlucky has aired all over Central and Eastern Europe in the past year, and has been an absolute hit everywhere it has aired, especially in Bulgaria, Serbia, Croatia, Romania and Lithuania. Other news has been the immense success of Marina in Hungary on the national broadcaster TV2, where the title achieved shares of 28 percent.

SURVIVAL OF THE FITTEST

Faced with new competition, Latin American distributors are employing a variety of methods to keep their CEE business on track. Comarex’s Velasco stresses the need to deliver “quality content with new and innovative themes that engage audiences.”

The DISCOP lineup includes the Azteca novelas Empress, Within My Soul and Under a Red Sky. “We are expecting to secure good deals, finalize sales, network and establish contacts [with] the new DTT and cable channels,”Velasco says.

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Lady in red: A long-time distributor to CEE, Comarex heads to DISCOP with Empress.

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Man of the hour: Televisa’s top property for DISCOP is The Power of Destiny.

Elena’s Ghost began launching all over Central and Eastern Europe last fall, including in Albania, where this telenovela beat a very popular telenovela in the same slot on a competing channel, and in Serbia, where the telenovela generated a share of more than 15 percent on Prva, attracting even a large male audience. Finally, our successful coproduction with [TV Globo], The Clone, has proved to be well loved by audiences in Central and Eastern Europe, most recently in Croatia, Bulgaria and Poland, where the telenovela gained shares well above those traditionally generated by the genre.”

THE NEXT STEP

With a slate that includes the U.S. hit The Queen of the South, along with My Heart Beats for Lola Volcan and Behind Closed Doors, Pillow is keen to consolidate Telemundo’s business in Romania, Serbia and the CIS countries, while also pursuing new growth areas.“Now that the crisis is subsiding and ad markets are growing once again, we see opportunities for growth in Russia’s format market, where broadcasters are once again soliciting production of new series instead of relying on their libraries. Another area of growth is in the digital-media market of Central and Eastern Europe, where our digital-media department has been closing numerous small but interesting deals with channels that now actively want to operate VOD and IPTV platforms.”

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Sahab at Televisa sees co-productions in CEE as being a potential future growth area, but she doesn’t expect that the business will really mature for another few years. “We’re talking with some of our main clients about it. We are willing to co-produce.

We’re starting in Western Europe but we will come to Central and Eastern Europe as well.”

What has boosted Televisa’s business in CEE is its ability to offer light-entertainment formats. Dancing for a Dream has been adapted across the region, including in Romania, where it’s in season 11. Sahab sees big things ahead for the new show Little Giants.

“I think this could be the second great entertainment format success from Televisa.”

Bandeirantes Communication Group sees its hook as being able to reflect Brazil’s “exotic and cool look” to the world, says Elisa Ayub, the director of international content at Band TV International. “In some ways, our culture, our landscapes are so different from Central and Eastern Europe, and that makes our productions so much [more] interesting. Our telenovelas and other TV shows offer a [distinctive] kind of innovation.”

Band will be offering at DISCOP the telenovela Forbidden Passions, adapted from a work by Portuguese writer Camilo Castelo Branco, along with a mix of comedies (Angels of Sex), reality (The League) and more.

Globo will also have a diverse portfolio, complementing its lineup of novelas with the drama series Starting Over Again and Miracle Hands, the mini-series Fifties Club, the nine-part GloboDOC and even some kids’ specials.

Artear, meanwhile, has the novela Gypsy Blood to offer up to broadcasters, along with the series The Social Leader, Left on the Shelf, Be Kind to Me and More Than Partners; and the factual shows Methods, Tasting Notes and Fantastic Biographies.

Across the board, distributors appear upbeat about their outing to DISCOP this year.“For us, it has always been a great market,” says Televisa’s Sahab.“Even though in some years there were fewer people, the quality of the meetings [has always been] really good. We have time to be with clients, to get to know what their needs are. It’s really useful for us. And for them, too.”

Wasserman says she is keen to “introduce our new shows, especially to the stations that didn’t go to MIPTV. We have high expectations especially for The One, Superclumsy and A Year to Remember. We expect to consolidate the relationships [we have] and to try to make adaptations of the new series in European markets.”

Caracol’s Reyes says, “We believe DISCOP will be a great platform for us to create new demand, close a series of new deals with our current customers, and increase even more the international awareness of our productions.”

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quickly became the market leader in Poland.

TVN24, Poland’s first all-news channel, followed in 2001, and in rapid succession the TVN Group launched other free-TV channels, including TVN Meteo, TVN Turbo, TVN Style, iTVN (for Poles living abroad) and TVN CNBC Biznes, developed in cooperation with CNBC. The success in the free-TV arena spurred the TVN Group to make its foray into pay TV—in 2006 the N platform was launched and today offers seven thematic packages—and into new media, where Onet.pl is the leading Polish Internet portal.

Markus Tellenbach joined the TVN Group in 2009 as president and CEO, having previously been a member of the TVN supervisory board. He has also been CEO of SBS Broadcasting, managing director of the German TV station VOX, and, since July 2010, the deputy chairman of the supervisory board of Sky Deutschland AG. Tapping into his extensive experience in both free TV and pay TV, Tellenbach now oversees TVN Group’s three major businesses: television broadcasting and production, digital satellite pay TV, and online. He talks to TV Europe about the strategies that have made the TVN Group so successful.

TV EUROPE: What factors have contributed to Poland’s being a vibrant media market?

TELLENBACH: To put it in a bigger perspective, Central Europe has very dynamic media markets.The ten-year period before the financial crisis was fueled by privatization and economic growth. Poland, in particular, was experiencing the same pattern. However, it did not suffer from the financial crisis as badly as the other Central European markets, and, in fact, is the only country in the E.U. that has not had a recession. It’s quite remarkable. And although we saw the advertising market contract, the recovery was very steep and last year we got back on a growth path.

Looking at why Poland is in such a unique position—well, the economic strength helps, but it’s also a highly competitive market, a highly innovative market, and Poles are, in general, TV lovers. They also embrace technology and innovation and are ready to buy the latest equipment. So Poland is a fantastic environment for the media business in general, and on the pay-TV side, it is one of the most competitive markets, with three satellite platforms, fully mature cable operations, and DTT and IPTV taking off.

TVN Group’s

Markus Tellenbach

By Anna Carugati

Poland is arguably the most dynamic of the media markets in Central and Eastern Europe. All have experienced rapid growth since deregulation began in the ’90s, when foreign investment pumped in by Western companies ignited an entrepreneurial spirit throughout the media sector, but Poland has demonstrated a greater vibrancy than other countries.

Among the very early Polish entrepreneurs were Jan Wejchert and Mariusz Walter, who in 1984 founded the ITI Group, one of the first privately owned companies in the country. ITI initially concentrated on the consumer-electronics import-export business, then set up an advertising agency and home-video operation, and later diversified into the snack-food business. But between 1995 and 2002, ITI divested itself of all nonmedia activities. In 1997, it set up the commercial station TVN, which 48

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TV EUROPE: On the free-TV side, how has TVN found a

balance between original productions, successful formats and imports, particularly from the U.S.?

TELLENBACH: TVN is a slightly female-skewing [family] station with a strong news component. That is a bit unusual positioning in this part of Europe, but a very successful one.

Three-quarters of the schedule consists of locally produced content and the remainder is acquired licensed product. Top feature films from the U.S. are of interest in Poland. Certain TV series, of course, are [also of interest], but generally, the 6/11

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TV EUROPE: As the Polish market is one of the most mature

ence share], which is about 1.5. So in the next couple of years we believe we are going to see growth in the advertising market, mainly as a function of growth in GDP. Forecasts call for a 4-percent growth in GDP in 2011 and as a rule of thumb, for a country like this, I would say the advertising market will do about double that. So it’s not yet double-digit, but a 6to 8-percent ad-market growth for electronic media should give us continued momentum to improve and see audience growth on the thematic channels. Out of our 23-percent audience share, about 19 percent comes from the main channel and 4 percent comes from the thematic channels, which is where I see substantial audience growth possible.

markets in CEE, on the free-TV side, do you still see room to grow your audience share and your advertising share, or at this point are you just consolidating the position you have?

TELLENBACH: We have more than 150 Polish-language channels in this country—so it’s quite a competitive landscape.

The TVN Group as early as 2001 started to launch alongside its main TVN channel a bouquet of thematic channels. Today we operate eight thematic channels that counterbalance the effect of fragmentation.

Currently, we have about 23 percent of the peak-time audience share in Poland and about 32 percent of the television advertising market, so we are a world-class company when it comes to power ratio [the measurement of a media company’s revenue performance in comparison with its audi-

TV EUROPE: What factors have been driving your pay-TV business? The N platform is doing quite well, isn’t it?

TELLENBACH: The N platform is nothing short of a roaring success. We started only four years ago and today we have more than 800,000 post-pay subscribers [customers who, upon signing a contract for a given package, pay a monthly fee] and about 300,000 customers with prepaid cards [similar to mobile phone prepaid cards]. So together we already have 1.1 million customers. We are forecasting that the post-paid side will grow from 800,000 to 900,000 subs, while the ARPU is increasing.The reason is that the Polish consumer is very techsavvy. We have embraced that particular characteristic and so far we are the second-largest high-definition platform in

thirst for American programs has decreased over the last few years with the building out of more professional production facilities and Polish viewers’ taste for local content. As we have such a high local production percentage on the main channel, we are very much in control of our schedules, which means we have typical TV seasons, spring and fall, in which we launch, as other markets do, our locally produced shows in prime time.

We do run features later in the evening, usually after 10 p.m. It’s a local-production-driven market but still it will continue to license a significant amount of U.S. product.

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Keeping current: The TVN Group has a strong news component, with news on its flagship TVN channel as well as a 24-hour news network, TVN24.

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and launching or converting more channels into high definition. On the pay-TV side, movies are hugely popular, and to that extent we are strengthening our movie offerings at a good pace in order to have the best of the best.

TV EUROPE: Are online and new media

also growing parts of your business?

TELLENBACH: Yes. We are not in search

A fresh beat: TVN has been airing a local version of BBC Worldwide’s Dancing with the Stars, Taniec z gwiazdami, since 2005.

Europe, only behind Sky U.K. We offer not only the largest number of full HD channels today (27 full HD channels), but more importantly, all our 800,000 post-paid subscribers are fully equipped to receive full high definition already.

Four years ago, high definition was not yet a clear winning proposition. We then made a brave move with initially quite expensive boxes to deliver the best technology and more channel offerings, and Polish customers [embraced them]. Our first effort involved innovation and technology leadership. We have expanded that position with various measures. Recently we were the first to launch a 3D channel and PVRs. Our customers have PVRs with 500 gigabyte hard disks—it’s the latest convenience you can offer on satellite—and a full-blown VOD offering. So generally the three platforms compete, but they have a different attitude when it comes to technology, and we have clearly taken the lead.

and social, but we are the number one portal in this market with 13.5 million users, and we’re the number two domain in this country with about 73-percent reach. The interesting bit on the online side is the dynamic growth from the advertising perspective. The last ten years there were few dollars in online, but we are already seeing display advertising increasing massively. We forecast that in 2011, display advertising in Poland will increase and will continue to do so for the next couple of years. So we believe the online advertising market is going to see strong and continuous growth, primarily as a shift from offline to online budgets. Onet—that’s the name of our portal— enjoys this leadership position to a certain extent because it’s part of a media group. Onet is leading when it comes to news, sports and business news, so all the verticals of the Onet domain have a very strong market position and with

TV EUROPE: How have the prepaid cards helped drive

subscriptions?

TELLENBACH: I’ll be honest, initially it was a test; we were not absolutely sure it would fly. But the first differentiation is the price: post-paid customers have the obligation of the contract, and packages start in Poland at around 50 zloty (€12.70). Our average ARPU is around 60 zloty (€15.20). So we started with a low price offer on prepaid, which is basically a card that you can top up over the phone or over the Internet, or at almost any retail shop or fuel station in the country. So it’s extremely convenient. People take the card to their holiday homes and use them as a second or third decoder, for example for the kids. It’s a convenient proposition, even with less features—it doesn’t have a PVR or VOD, but it’s a good offering. We have extended this prepaid offering to high definition, where in Poland you can buy a card that is 20 zloty (€5.10) and receive 12 HD channels. This is a popular proposition that is relatively inexpensive because those boxes don’t need hard disks. Prepaid has been well received.The consumer feels in control of his expenditure, he spends the money when he wants to use it. Altogether we have close to 300,000 active customers with little marketing, which is a convincing response from the consumer side.

TV EUROPE: Do you plan to launch more channels for N? TELLENBACH: On the expansion front, we have two focuses.

One clearly is expanding and embracing the technology side 50

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Model behavior: A second season of Poland’s version of Top Model is set for TVN’s fall schedule.

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that also a very good position to compete for ad dollars.

TV

EUROPE:

Are your viewers watching online as well as on linear channels?

TELLENBACH:

Driving forward: TVN24 uses outside satellite broadcasting vans to provide the latest breaking news.

Regardless of how fancy the devices are, Poles will look for Polish-relevant content. The DNA of our company is to be the leader in news and produce the best Polish entertainment content. So we are not scared; we look to convergence as an accelerator for our market position.

TV EUROPE: As you look forward 12 to 24 months, what

are the major opportunities and challenges you see for the TVN group?

TELLENBACH: Convergence and fragmentation—those are the issues that we have to master, and I believe we are well prepared to take momentum both on convergence and fragmentation with just one or two frequencies on digital terrestrial. So we are developing that. We are entering partnerships with hardware manufactures to stay ahead on the connected-TV side. More interesting medium term is for us to continue to expand our production capabilities. That is a key both on the free and pay sides, as well as for our online portal Onet, where we continue to have the best Polish programming available. Looking further out, I think the consolidation in the market will be a challenge. A further boost will come from the analogue shutdown in 2013, providing us with digital terrestrial television with national reach.

On the thematic-channel side, we are going to see mobile services coming off special interest channels such as news. We have the leading news service in this country and it is gearing up to produce apps for all mobile devices.

The iPhone does not yet have much penetration in this market, but smartphones in general will grow very fast.

On the mobile-content side we want to get a solid slice of that pie.

There are plenty of challenges ahead, as for any media company, but at the end of the day, we are a content house; that is where our DNA is. We look at the future with a platformagnostic approach ... to make sure our programs and brands travel on all devices and all platforms and reach the Polish user.

Absolutely. Poles are techno lovers.

Hybrid TV sets, also known as connected TV, are being embraced by consumers. Sony, Samsung and Panasonic are putting out the latest hybrid sets. The telcos are moving quickly to establish broadband and new IPTV offerings.There will be web platforms— hopefully our own will succeed. This will become a competitive environment where Google and Apple and other companies will also make their [imprints].

Convergence is happening at a fast pace on the tech side and ... the TVN group has entered into a unique and longterm partnership with Telekomunikacja Polska TP. We have just started to launch bundled services, such as broadband and pay TV or pay TV and mobile. There are many combinations that we will put on the market, with the goal of having the most competitive offer on the one hand but, on the other hand, to also develop devices that are particularly customer friendly. I think that is a key focus: to provide technology in customers’ living rooms that is manageable. We are embracing that by jointly launching decoders and solutions with user interfaces that make the whole in-home experience easy and enjoyable.

So online viewing will become more and more an issue as broadband penetration increases, but remember, only about 54 percent of Polish households have broadband connection. And broadband here doesn’t mean much more than two megabytes. In fact, highdefinition streaming today is not possible, but it will be tomorrow. So we are fully aware that convergence is a challenge for a media company, and with this partnership agreement with TP we made the first step [towards] the beginning of convergence. Having said that, at the end of the day, content remains king. It’s been said a mil- Keeping in control: The TVN Group operates a handful of channels, including TVN Meteo, Poland’s first lion times and is still true. dedicated weather channel; TVN Turbo, geared toward males; and the female-skewing TVN Style.

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TV EUROPE: Tell us about Doma TV, the channel you recently launched in Croatia. Are you looking to launch more channels in other countries?

SARBU: Doma, which means “at home,” is a concept we developed in Romania 12 years ago, [at this time it was] named Acasa. Why? Because we thought, and we still think, that women are our most important target group, not only for us, but for the advertisers present in the region. We need to offer quite a large range of programs to women of different ages. For the last 12 years we have been expanding this channel concept, first into Slovakia, then in Croatia, and we have it on the shelf for all our other markets.Today competitors try to copy us. But Doma/Acasa is not the only format we have prepared for the coming years. As recovery progresses in our markets, new projects will start to air.

Central European Media Enterprises’

Adrian Sarbu

By Anna Carugati

Until the fall of the Berlin Wall and the end of communism, viewers in Central and Eastern Europe had a very meager diet of broadcast news and entertainment. Each country in the region, in fact, only had state-run television. All that changed thanks to Ronald Lauder, who in 1994 founded Central European Media Enterprises (CME). Lauder, who had a vision for providing viewers with independent news coverage and high-quality programming, started setting up commercial TV stations whose advertising businesses helped stimulate local economies and offered information and entertainment never seen before in the region.

Today, CME is a vertically integrated company with three main divisions: Broadcasting, MediaPro Entertainment and New Media. Broadcasting has 23 channels reaching an audience of 50 million consumers across six Eastern European markets, with an estimated combined television advertising spend of over $1 billion in 2010. MediaPro Entertainment, which CME acquired in 2009, is one of the leading producers and distributors in CEE. In fact, in 2010, MediaPro delivered 2,771 hours of content to CME broadcasters and licensed 2,058 hours of content internationally.

New Media operates more than 60 TV and video-related websites, which attract more than 2 million unique users every month.

CME’s net revenues in 2010 were $737.1 million.

Adrian Sarbu, CME’s president and CEO, has spearheaded the company’s three-pronged strategy: producing and broadcasting high-quality local programming and independent news; building groups of channels in each key market (five channels in Bulgaria, four in the Czech Republic, three in Croatia, seven in Romania, four in the Slovak Republic and three in Slovenia); and sharing knowledge and skills between its locally managed teams.

This strategy has paid off. CME has market-leading channels in each country it operates in. Time Warner has recognized the merits of CME’s positioning for the future, so much so that the U.S. media giant acquired a 31-percent stake in CME in 2009, and increased it to 34.4 percent earlier this year.

Sarbu talks to TV Europe about the successes of each of CME’s divisions.

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TV EUROPE: What are the advantages of having several

channels in the same country?

SARBU: Today we have more than 20 channels in six coun-

tries.The multichannel strategy is a normal evolution of television. You experienced it in America in the ’80s and ’90s.

The development of distribution platforms—cable, satellite, IPTV and others—requires a more diverse offer from any broadcaster who wants to maintain audience share. So, in effect, we are looking to maintain our share by diversifying our portfolio of channels.We are aware that if we do not do this, our competitors will eat away at our audience. However, from now on we are looking to diversify our revenues and increase the subscription fees, which we get from the cable or satellite operators.

The multichannel strategy was a choice and also a must for us ten years ago. We understood the need, we understood the expectations of the audience, we understood the way we should evolve our operation. And the result is that we are leaders in audience.

Newsworthy content: CME’s TV Nova is the largest commercial station in the Czech Republic, with news as a top offering.

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SARBU: First of all, MediaPro can be a co-producer of movies,TV series and romantic drama novelas, which sell very well worldwide. Secondly, it offers production services for large American and international projects which are set and shot in CEE, and thirdly, it offers its services in cofinancing international productions as well distributing international products throughout CEE, which is its area of expertise.

TV EUROPE: What benefits has CME derived from the

Time Warner investment?

SARBU: To have a strategic investor like Time Warner is the

dream of many media companies in the world.Time Warner is a strong content company.We are a strong content company in our region, and there are a lot of affinities with respect to the way we see the development of our businesses. We think we can share expertise and resources.We are a buyer of Time Warner content, not only for television, but also for theatrical and home-video distribution. We also have several projects in development with Warner Bros. A lot of investors ask me what the benefits are of Time Warner’s investment.The first benefit of having Time Warner as a shareholder is the fact that it’s Time Warner.The second is the way we can structure CME in the future and harmonize with Time Warner’s strategy for content, which is similar to ours.

TV EUROPE: What are your plans for digital? And at this

point what type of content do you provide online?

SARBU: As you know, in the last ten years, there isn’t a sin-

Embraced by all: The popular Romanian telenovela In the Name of Honour from MediaPro Entertainment has been bought by channels in Latin America.

TV EUROPE: The overall GDP in the CEE region is expected

to reach about 3.2 percent this year. That’s two percentage points higher than GDP in the Euro Zone. What impact will this have on the television industry and on advertising?

SARBU: Analysts and investors have been expecting this recovery for more than a year. We see our markets gradually pulling out of the economic crisis. GDP is an important indicator. In a normal economy, an increase in GDP would trigger a trickle-down increase in the advertising market. But for the first months of this year, and probably for the whole year, we’ll still have to wait and see what the impact of this expected rise in GDP will have on consumer spending and TV ad spend.

We enjoy a position that we’ve built up over the years, which gives us a very high operating leverage. Our market share in all our countries varies between 41 percent to over 70 percent. Our audience is stable and strong, so from every dollar spent more than 50 cents will come straight to our bottom line. We expect all of our markets to recover this year.

gle digital strategy coming from a television company or even a large media operation that has proved to be the right one or the only one.

Here at CME we are more in line with the philosophy that was expressed by Time Warner: TV Everywhere. We see the Internet as a new distribution territory. We see our product being used by various groups of consumers on all possible distribution platforms and devices, and we are working on providing as much of our content as possible. In the first stage of our digital development, our brands were available on the Internet and we had a very strong presence in our markets. So basically we moved to the Internet first with a news portal and various types of sites, which were financed by advertising.

In the fourth quarter of 2010, we launched Voyo in the Czech Republic, which has similar characteristics to both the BBC’s iPlayer and Hulu. Voyo will offer our channels online and will also be a platform for video on demand and catch-up TV. We will aim to be the same leading provider of content through the Internet in our markets as we are through our television stations.

TV EUROPE: Are advertisers responding well to growth

TV EUROPE: MediaPro is the leading studio in the region.

opportunities on digital?

How important is it at this point to develop an international distribution business?

SARBU: It’s very important, because we have quite a rich slate. MediaPro produces more than 1,000 hours of content a year for our broadcasters as well as for our home-video and theatrical-distribution arms. So having an international sales department is a normal evolution for MediaPro.Today we sell our products in more than 15 countries.

SARBU: Generally advertisers and ad agencies are moving

quite fast in expanding their presence in new media. In our markets, advertisers are choosing the Internet mostly at the expense of print media while the share of television advertising is still growing. So advertisers are willing to get a complimentary Internet advertising offer from us on the top of what we give them through television.

TV EUROPE: What does MediaPro have to offer studios and

TV EUROPE: Are you optimistic about the future of CME? SARBU: I was always optimistic, but now I am more opti-

producers in the West?

mistic than at any point over the last two years.

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