TVBIZZ Magazine: Dirk Gerkens - Back with a Vengeance
After a short break, Dirk Gerkens is back in Hungary; with a vengeance. The former RTL Klub CEO and Hungary’s undisputed top media manager for seven years in a row is now at the helm of TV2 Group. Gerkens has one mission: to put an end to RTL’s domination with an aggressive strategy including a beefed-up volume of original productions, new cable channels and new revenue streams from advertising and pay TV. The top exec tells Georgi R. Chakarov he is already very satisfied with the first results six months after he joined the company.
Mr. Gerkens, how does it feel to be back in Hungary?
It feels great! It was only a short break, but I am very happy to be back and looking forward to my new job.
You are currently not on “friendly terms” with RTL. Tell us more about the court case and what are the latest developments
Since we are currently in court, I cannot disclose the details of the case, but I am just expecting to receive what I am being owed contractually.
There were rumors that your departure from RTL Klub was one of the conditions put by the government in order to lower the advertising tax. How would you comment on that?
I think you should rather ask that question from RTL. I built the most successful media group in Hungary and was not ready to do the same for them in Africa or Asia, positions which I declined.
After so many years with RTL Klub, why did you decide “to join the enemy”?
When I met Andy Vajna, the new owner of TV2 Group and heard about this project, it was easy to say yes immediately. He is a great media person and we share the same vision about what type of television group we want to build. The job ticked many boxes. I love to work in a much more free and entrepreneurial way, than in most media corporations.
TV2 has been posting negative financial results since 2010. How do you plan to return to profit?
We first need to get close to my previous company in terms of advertising and subscription revenues. Our power ratio is way below the one of RTL and its unsustainable. I don’t know about any market where a player doing 27% of the audience, gets 55% of the ad market, so yes, we are aiming to gain significant advertising market share.
We cannot compete with only 3 cable channels, which is the reason why we just announced to build a cable portfolio of 10 channels by the end of the year. The fact that the regulatory environment allows us to charge for our main channel will also impact positively our subscription revenues. We also need to focus on the ratings of our main channel, TV2 and frankly when I see the first results of our relaunch strategy, I am extremely confident about the future.
There have also been rumors you will be acquiring premium sports rights. Please, tell us more about your multichannel strategy?
We have decided to launch and reposition some of our channels after a very well thought analysis of the market. We will offer to the market great channels providing top content at extremely competitive prices. I am a big fan of sports and I believe that this genre would fit perfectly in our portfolio. This can be through content being aired on TV2, on some of our channels or potentially a fully dedicated sports channel.
How would you describe the Hungarian TV market? What do you expect to happen once you start charging the cable operators?
The Hungarian market is an extremely competitive and fragmented market with more than 110 Hungarian speaking channels. Cable subscription fees (ARPU) are extremely low and will need to increase at one point. Advertising prices are among the lowest in CEE and should see an increase due to the lack of inventory. TV2 is extremely well positioned in this context, due to our increasing audience, our extended upcoming cable portfolio and the price advantage that we have versus RTL.
The fact that both RTL and us can charge, will not affect drastically the economics of the distribution market but I guess it will be the opportunity to review the portfolio of channels that they carry. Frankly, it is a total anachronism that for 19 years, the most watched channels are basically the ones not able to charge for their content, when all the other players have a double revenue stream combining subscription and advertising revenues. I guess that it will also speed up the market consolidation process, which is logical once the market reaches a certain level of maturity.
You also started a strategic partnership with Atmedia. How has this improved your advertising sales?
For us to join Atmedia was a no brainer and the right thing to do. Agencies were eager to play R-time/RTL against Atmedia and us to achieve even lower advertising prices. By joining Atmedia we could avoid being squeezed commercially and maintain both our advertising market share as well as our prices. Atmedia is already a larger sales house than R-time and due to its independence it guarantees a fair treatment of all its members and avoid conflicts of interest of other players on the market.
What are TV2's programming plans for fall 2016? What will be the new and returning shows?
In 2016 Q2 our strategic goal was to become number one on weekends, therefore both on Saturdays and Sundays we aired and produced large-scale event shows. We had our kid talent show Kismenők (Little Cools) and A Nagy Duett (The Big Duet), which delivered outstanding results with a share of 32% for the finale. My Man Can aired on weekdays and delivered top ratings, winning the slot against The Farm, so frankly I couldn’t be more satisfied.
This was obviously achieved thanks to the great help of IKO Production which is the most successful production company in Hungary. In the summer, we will air some new local productions, but the market will be mainly dominated by the major sports events. In the fall Your Face Sounds Familiar will return, having been the most watched show of the market last year and we will launch the first season of Star Academy, which will combine the features of a daily reality with an event show. We will continue with Édes Élet (Sweet Life) and our daily show Jóban Rosszban (Good Times, Bad Times).
There are many other shows in preparation which I cannot disclose at this stage, but frankly TV2 Group has never had such a strong line-up in its history both on the main channel and its cable portfolio. To make a long story short, TV2 is not short of ambitions and has the means of its goals, which means that the market will become competitive again.
There has also been concern regarding the political influence over TV2. Reportedly, your company has taken several loans from state banks. Also, some media have claimed that the appointment of Gabriella Halko as Business and Strategy Director is also a sign of the big influence of the government over TV2. How would you comment on that?
This is nonsense. I have the full authority to run the company independently. Gabriella is a great professional and, as far as I know, never had any kind of governmental position. The whole management has been picked by me in accordance with my board.
This interview appeared first in the NATPE Budapest 2016 edition of TVBIZZ Magazine. You can download the full digital version here: