Pull Back the Curtain and Tune In

Michael Hedges November 20, 2009 (follow on Twitter)

Privately owned commercial broadcasting has come into its own during the last two decades. There have been struggles, successes and more struggles. Public sector competitors can be tough, governments might not understand and advertisers are, today, hard to find. Programming, decisive and unique, continues to draw audiences.

Five years before the fall of the Berlin Wall, commercial televisionin Germany was born, quite literally with an on-camera delivery. RTL Plus showed a team of doctors symbolically delivering a tiny screen on January 2nd 1984. The day before, cable and satellite channel Sat.1 was born. 

These were tiny experiments with years of growing pains ahead. When RTL Plus began broadcasting it was transmitting from Luxembourg. Sat.1 – know known as ProSiebenSat.1 – literally died several times on the way to adulthood. With great reluctance, governments agreed to private sector broadcasting under very limited terms.

These were the 1980’s – not the 1950’s – and politicians knew the power of broadcasting and suspected vast sums of money would be available in exchange for licenses. At the same time the State broadcasting monopolies would need to be reorganized as gently as possible to maintain message control. Private sector licensees would be encouraged to focus on entertainment and other non-threatening forms of diversion. The newly minted “public service” broadcasters would devote sufficient on-air time for every politician, their family members and friends.

In countries newly separated from the Soviet umbrella private sector broadcasting lifted the eyebrows of opportunity. Privatizing former State enterprises was on every government’s agenda. State-owned newspapers were easily sold to either local power brokers or Western publishers, often in combination. Broadcasting – and certainly telecom-related transmission services – would be even more financially rewarding.

The Hungarian government in 1986, sensing change on the horizon, formed Radio Danubius within the State broadcaster Magyer Radio (MR) as a bridge to the future. It would be Hungary’s first radio channel with commercial advertising. It would chase listeners and advertising with, almost, reckless abandon. It was popular.

So popular was Radio Danubius that the Hungarian government decided it, too, would be privatized. The second channel of Hungarian State television TV2 was soon sold to Scandinavian Broadcasting System (SBS). Radio Danubius was sold to UK broadcasting company GWR, which sold it on to venture capital firm Advent Capital for €30 million.

As the newly independent State of Eastern Europe looked toward European Union membership, national laws – including media ownership rules - were changed to take advantage of foreign media companies and venture capital firms looking for growth opportunities. In addition to SBS, now part of ProSiebenSat.1 Group, big television groups RTL, Modern Times Group (MTG) and News International reached into Eastern Europe. Lagardère and Metromedia International (MMI) made significant investments in radio broadcasting. Emmis International, NRJ Group and Communicorp, which bought much of the MMI investment, would follow. Eastern Europe became the hot media investment market, quickly eclipsing Portugal, Greece and Spain.

Western Europe also embraced privately owned commercial broadcasting. Sweden opened to private broadcasting; Viasat (MTG) launching a television channel in 1987, commercial radio starting in 1993. Switzerland and Austria became the last European countries to license private radio and TV in 1996. Commercial broadcasting had by the mid-1990’s pushed into every corner of Europe.

Unique among Western broadcast investors has been Central European Media Enterprises (CME), the television company originally founded by Estée Lauder heir Ronald Lauder. CME started with TV Nova in the Czech Republic and has expanded into Romania, Slovakia, Slovenia, Croatia and Bulgaria. Pushing further East, CME invested in Ukraine. Acquiring strong local managers and talent has been the company’s long-standing practice. Recently its corporate headquarters moved from London to Prague.

“The most significant event, without any doubts, was that independent television appeared at all,” says 1+1 Group General Director Oleksandr Tkachenko. “After the break-up of the Soviet Union, the Ukrainian TV-market started to develop, and managed to become one of the most dynamic markets in Europe.”  CME entered Ukraine with its investment in Studio 1+1 in 2004 and, after several struggles, became the full owner in 2006.

“This process was started from three national TV-channels, which mostly broadcasting Russian programming. In 1995 the first commercial TV-channel came on-air – and it was “1+1”. It was a real challenge, because the channel had to compete with Russian TV, which was very powerful and popular with Ukrainians. The channel broadcast in the Ukrainian language, which was a significant risk. The second commercial TV-channel, which appeared on Ukrainian air, was “Inter”, which started broadcasting in 1996. “Inter” was mostly targeting Eastern Ukraine, and used lots of Russian-produced programs. After this many new players came onto the market.

“Now the Ukrainian TV-market is robust and highly competitive. On one hand, Ukraine is still rather dependable on Russian production – because of the similarity of languages, common celebrities, and common tastes of viewers. Russia is a serious competitor, because their production is much stronger than Ukrainians.

“On the other hand, Ukraine is much more European in terms of competition and  business-processes. A unique feature of the Ukrainian TV-market is that we have six free-to-air massive channels, and around six smaller niche channels, which makes competition between channels very competitive. Different from Russia, all the largest TV-groups in Ukraine work with their inside sales-houses, which makes competition transparent.”

Commercial broadcasting also came to Latvia in 1996 with the launch of LNT - Latvijas Neatkartga Televtzija (Latvian Independent Television) – and several radio stations. Two years later TV3 appeared on satellite and cable, terrestrial service starting in 2001. “Suddenly,” said TV3 CEO Kaspars Ozolins, there was “freedom in editorial content decisions from State control, giving opportunity for commercial TV stations to challenge the public broadcaster in information supply in new ways, being able to form and to deliver alternative opinions to society. Offering to the public television as one of the main suppliers of broad entertainment helped to break the Iron Curtain in people’s mindsets with foreign acquired programs.”

Programming has been and remains televisions muscle. Commercial broadcasters, competing with public channels as well as all sorts of Web and mobile services, must continually find, produce and present something new and eye-catching. “As we move from the world of ‘broadcasting’ to one of ‘multiplatform distribution of audiovisual content’, two things will remain certain,” observed Association of Commercial Television Europe (ACT) Director General Ross Biggam. ACT recently celebrated twenty years of commercial television at their annual Brussels conference (November 4). ”That the viewer’s control over what to watch, when and where to watch it will only continue to increase. And for that, the decisive factor in our business is what it always has been: the programmes.”

The Curtain Falls - Media Rises

The series of five articles focused on the fall of the Iron Curtain; Germany in 1989, new media rules, State broadcasting becomes public broadcasting, international broadcasting refocuses and the rise of commercial broadcasting. Available at no charge to ftm Members, others €15. Order here